As filed with the Securities and Exchange Commission on July 7, 2008
Registration No. 333-150468
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective
Amendment No. 2
to
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EASY ENERGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 3577 26-0204284
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
inception or organization) Classification Code Number) Identification No.)
Suite 105 - 5348 Vegas Dr.
Las Vegas, NV 89108
Tel: (702) 442-1166
(Address, including zip code, and telephone number of
registrant's principal executive offices)
EASTBIZ.COM INC.
5348 Vegas Drive
Las Vegas, NV 89108
Tel: (702) 442-1166
(Name, address, including zip code, and telephone number of agent for service)
Copy to:
Edwin L. Miller Jr., Esq.
Zysman, Aharoni, Gayer & Co.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Telephone: (617) 338-2800
Fax: (617) 338-2880
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated Filer [ ] Smaller reporting company [X]
(Do not check if a Smaller reporting company)
CALCULATION OF REGISTRATION FEE
==========================================================================================
Title of Each Proposed Proposed
Class of Number of Maximum Maximum
Securities Shares Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered(1) Share Price(US$) Fee
- ------------------------------------------------------------------------------------------
Common Stock, par value
$0.00001, offered for
resale by selling
security holders 5,608,833(1) $0.30(2) $1,682,650 $ 66.13
- ------------------------------------------------------------------------------------------
Common Stock to be
offered for resale by
selling security
holders upon exercise
of Warrants 15,029,440 $0.30(2) $4,508,832(2) $177.19
- ------------------------------------------------------------------------------------------
Total 20,638,273 $6,191,482(2) $243.33
Shares of Common Stock
==========================================================================================
(1) An indeterminate number of additional shares of common stock shall be
issuable pursuant to Rule 416 to prevent dilution resulting from stock
splits, stock dividends or similar transactions and in such an event the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416 under the Securities Act.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
upon the average of the high and low prices of the registrants common stock
on the OTC Bulletin Board on April 21, 2008.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION, DATED ____________, 2008
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
EASY ENERGY, INC.
Prospectus
---------------------------------
20,638,273 SHARES OF COMMON STOCK
---------------------------------
The prospectus relates to the resale to the public by certain selling
shareholders of Easy Energy, Inc. of:
* Up to 750,000 shares of our common stock issued in a private placement on
March 27, 2008.
* Up to 882,353 shares of our common stock issued in a private placement on
March 10, 2008.
* Up to 3,000,000 shares of our common stock which may be issued upon the
exercise of warrants issued in connection with the private placement on
March 10, 2008.
* Up to 300,000 shares of our common stock issued in a private placement on
March 3, 2008.
* Up to 1,000,000 shares of our common stock which may be issued upon the
exercise of warrants issued in connection with the private placement on
March 3, 2008.
* Up to 3,676,480 shares of our common stock issued in a private placement on
February 28, 2008.
* Up to 11,029,440 shares of our common stock which may be issued upon the
exercise of warrants issued in connection with the private placement on
February 28, 2008.
The warrants issued on March 10, 2008 entitle the holder to purchase one
additional share of our common stock at an exercise price of $0.27 for a period
of five years from the closing date.
The warrants issued on March 3, 2008 entitle the holder to purchase one
additional share of our common stock at an exercise price of $0.15 for a period
of five years from the closing date.
The warrants issued on February 28, 2008 entitle the holder the purchase one
share of our common stock at an exercise price of $0.27 for a period of five
years.
The shares were acquired by the selling stockholders directly from our company
in private transactions that were exempt from the registration requirements of
the Securities Act of 1933. The selling stockholders may offer to sell the
shares of common stock being offered in this prospectus at fixed prices, at
prevailing market prices at the time of sale, at varying prices or at negotiated
prices. Our common stock is quoted on the OTC Bulletin Board under the symbol
"ESYE.OB". On July 1, 2008 the closing bid price for one share of our common
stock on the OTC Bulletin Board was $0.30.
We will not receive any proceeds from the resale of shares of common stock by
the selling stockholders, although we may receive proceeds of up to $3,937,949
if all of the warrants are exercised. We will pay for all costs associated with
this registration statement and prospectus.
The selling shareholders may be deemed to be "underwriters," as such term is
defined in the Securities Act.
OUR BUSINESS IS SUBJECT TO MANY RISKS, AND AN INVESTMENT IN OUR COMMON STOCK
WILL ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD INVEST IN OUR COMMON STOCK
ONLY IF YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. YOU SHOULD CAREFULLY
CONSIDER THE VARIOUS RISK FACTORS DESCRIBED BEGINNING ON PAGE 3 BEFORE INVESTING
IN OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
EASY ENERGY, INC.
Prospectus
--------------------------------
20,638,273 SHARES OF COMMON STOCK
--------------------------------
TABLE OF CONTENTS
Page Number
-----------
PROSPECTUS SUMMARY 1
RISK FACTORS 3
FORWARD-LOOKING STATEMENTS 9
USE OF PROCEEDS 9
DETERMINATION OF OFFERING PRICE 9
DILUTION 9
SELLING SHAREHOLDERS 9
PLAN OF DISTRIBUTION 12
INTEREST OF NAMED EXPERTS AND COUNSEL 13
DESCRIPTION OF BUSINESS 13
DESCRIPTION OF PROPERTY 16
DESCRIPTION OF SECURITIES 16
LEGAL PROCEEDINGS 17
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 18
APPLICATION OF CRITICAL ACCOUNTING POLICIES 21
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 22
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 22
EXECUTIVE COMPENSATION 24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 27
DISCLOSURE OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES 27
EXPERTS 28
WHERE YOU CAN FIND MORE INFORMATION 28
FINANCIAL STATEMENTS 29
As used in this prospectus, the terms "we", "us", "our" and "Easy Energy" mean
Easy Energy, Inc., unless otherwise indicated.
All dollar amounts refer to U.S. dollars unless otherwise indicated.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because this is a summary, it may not contain all of the information that you
should consider before receiving a distribution of our common stock. You should
read this entire prospectus carefully. We are a development stage company that
has only recently begun operations. We have not generated any revenues from our
intended business activities, and we do not expect to generate revenues in the
near future. We may never generate revenues. We have minimal assets and have
incurred losses since inception.
CORPORATE BACKGROUND
Easy Energy, Inc. was incorporated under the laws of the State of Nevada on May
17, 2007. We have not generated any revenue to date and are a development stage
company. We currently have no employees other than our President and Secretary
who are also our only board members. We plan to develop a novel, man-powered
charger solution for the problems related to the ongoing power requirements of
small hand-carried battery-powered personal electronic devices. On August 20,
2007 we filed a patent application (Application No.: 11/841,046) with the United
States Patent and Trademark Office. Prior to our incorporation, Mr. Guy Ofir,
our President and Director developed a prototype of the patent. On January 29,
2008, we announced on the completion of the fully working prototype of the
man-powered charger solution for battery powered small hand-carried devices.
The Company's principal business plan is to manufacture and market the product
and/or seek third party entities interested in licensing the rights to
manufacture and market the man-powered charger. Our target market will be
consumers of disposable and rechargeable batteries, those who heavily depend on
their portable devices, especially cell phone users, and those who are looking
for "green" energy sources.
Our principal executive office is located at Suite 105 - 5348 Vegas Dr., Las
Vegas, NV 89108. Our telephone number is (702) 442-1166. We also have an office
in Israel at 26 Ga'aton Blvd., Nahariya 22401 Israel, Tel. No. +972-4-988 8314 .
We do not have any subsidiaries. The address of our resident agent is
Eastbiz.com Inc, 5348 Vegas Dr, Las Vegas, Nevada, U.S.A., 89108.
Due to the uncertainty of our ability to meet our current operating and capital
expenses, in their report on our audited financial statements for the period
ended March 31, 2008 our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.
NUMBER OF SHARES BEING OFFERED
This prospectus covers the resale by the selling stockholders named in this
prospectus of up to 20,638,273 shares of our common stock. The offered shares
were acquired by the selling stockholders in several private placement
transactions. All of these transactions were exempt from the registration
requirements of the Securities Act of 1933. The selling stockholders may offer
to sell the shares of common stock being offered in this prospectus at fixed
prices, at prevailing market prices at the time of sale, at varying prices or at
negotiated prices. Our common stock is presently traded on the OTC Bulletin
Board under the symbol "ESYE.OB". Please see the Plan of Distribution section at
page 11 of this prospectus for a detailed explanation of how the common shares
may be sold.
NUMBER OF SHARES ISSUED AND OUTSTANDING
There were 93,186,070 shares of our common stock issued and outstanding as at
July 1, 2008.
1
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of our
common stock being offered for sale by the selling stockholders, although we may
receive proceeds of up to $3,937,949 if all of warrants are exercised. We will
incur all costs associated with this registration statement and prospectus.
SUMMARY FINANCIAL DATA
The summary financial data presented below is derived from and should be read in
conjunction with our audited financial statements from May 17, 2007 (date of
inception) to March 31, 2008, including the notes to those financial statements
which are included elsewhere in this prospectus along with the section entitled
"Plan of Operation" beginning on page 21 of this prospectus.
As at
BALANCE SHEET INFORMATION March 31, 2008
------------------------- --------------
Cash $ 725,747
Total Assets $ 775,747
Liabilities $ 300
From May 17, 2007
(date of inception) to
STATEMENT OF OPERATIONS INFORMATION March 31, 2008
----------------------------------- --------------
Working Capital $ 775,447
Expenses $ 437,752
Total Number of Issued Shares of Common Stock 93,186,070
Net Gain (Loss) $ 435,824
2
RISK FACTORS
An investment in our common stock involves a number of very significant risks.
You should carefully consider the following risks and uncertainties in addition
to other information in this prospectus in evaluating our company and its
business before purchasing shares of our company's common stock. Our business,
operating results and financial condition could be seriously harmed due to any
of the following risks. You could lose all or part of your investment due to any
of these risks.
RISKS RELATED TO OUR BUSINESS
OUR SUCCESS IS HEAVILY DEPENDENT ON PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS.
We rely on a combination of patent, copyright, trademark, and trade secret
protections to protect our proprietary technology. Our success will, in part,
depend on our ability to obtain trademarks and patents. We have recently
submitted provisional patent applications, but we cannot ensure that any patents
will issue from those applications. We cannot assure you that the patents issued
to us will not be challenged, invalidated, or circumvented, or that the rights
granted under those registrations will provide competitive advantages to us.
We also rely on trade secrets and new technologies to maintain our competitive
position. Although we have entered into confidentiality agreements with our
employees and consultants, we cannot be certain that others will not gain access
to these trade secrets. Others may independently develop substantially
equivalent proprietary information and techniques or otherwise gain access to
our trade secrets.
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELECTUAL PROPERTY, THIRD PARTIES
MAY BE ABLE TO USE OUR TECHNOLOGY, WHICH COULD ADVSERSLY AFFECT OUR ABILITY TO
COMPETE IN THE MARKET.
Our commercial success will depend in part on our ability to obtain and maintain
patent protection on our products, and successfully defend these patents and
technologies against third-party challenges. In particular, On August 20, 2007,
we filed a provisional patent application (Application No.: 11/841,046) with the
United States Patent and Trademark Office, which is still pending. In doing so,
we have secured a filing date in the United States Trademark and Patent Office.
In order to extend the potential patent protection beyond the US, we are
required to file an international patent application via the Patent Cooperation
Treaty ("PCT") no later than August 19, 2008. On June 30, 2008, we have filed
the international patent application via the PCT. This international filing will
enable us to file a national patent application in any PCT country until
February 19, 2009 and still claim the benefit of the priority date of August 20,
2007. After February 29, 2009, we will be required to file a separate patent
application in each PCT country, in which we would like to have a patent
protection. There is no certainty that such applications will be approved. In
addition, even if such applications are approved, they may not be sufficiently
broad to prevent others from practicing our technologies or from developing
competing products. Furthermore, others may independently develop similar or
alternative technologies or design around our patented technologies. Patents we
use may be challenged or invalidated or may fail to provide us with any
competitive advantage. Moreover, in certain parts of the world, such as in
China, western companies are adversely affected by poor enforcement of
intellectual property rights.
WE MAY BE EXPOSED TO LIABILITY FOR INFRINGING INTELLECTUAL PROPERTY RIGHTS OF
OTHER COMPANIES.
Our success will, in part, depend on our ability to operate without infringing
on the proprietary rights of others. Although we have conducted searches and are
not aware of any patents and trademarks which our products or their use might
infringe, we cannot be certain that infringement has not or will not occur. We
could incur substantial costs, in addition to the great amount of time lost, in
defending any patent or trademark infringement suits or in asserting any patent
or trademark rights, in a suit with another.
WE HAVE LIMITED OPERATING HISTORY AND HAVE SUSTAINED LOSSES SINCE INCEPTION,
WHICH WE EXPECT TO CONTINUE INTO THE FUTURE.
3
We were incorporated on May 17, 2007, and have very limited operations to date.
We have not realized any revenues to date. Our product is under development and
is not ready for commercial sale. We have no operating history at all upon which
an evaluation of our future success or failure can be made. Our net loss from
inception to March 31, 2008 is $435,824. Based upon our proposed plans, we
expect to incur operating losses in future periods. This will happen because
there are substantial costs and expenses associated with the development,
testing and marketing of our product. Based on arrangements made with potential
distributors and the development stage of our product, we believe that we are at
least 8-10 months away from generating our first revenues. We may be wrong and
may fail to generate revenues in the future. If we cannot attract a significant
number of users, we will not be able to generate any significant revenues or
income. Failure to generate revenues will cause us to go out of business because
we will not have the money to pay our ongoing expenses.
In particular, additional capital may be required in the event that:
- the actual expenditures required to be made are at or above the higher
range of our estimated expenditures;
- we incur unexpected costs in completing the development of our product
or encounter any unexpected technical or other difficulties;
- we incur delays and additional expenses as a result of technology
failure;
- we are unable to create a substantial market for our product; or
- we incur any significant unanticipated expenses.
The occurrence of any of the aforementioned events could adversely affect our
ability to meet our business plans and achieve a profitable level of operations.
IF WE ARE UNABLE TO OBTAIN THE NECESSARY FINANCING TO IMPLEMENT OUR BUSINESS
PLAN WE WILL NOT HAVE THE MONEY TO PAY OUR ONGOING EXPENSES AND WE MAY GO OUT OF
BUSINESS.
Our budgeted expenditures for the next twelve months are $922,000 of which we
have prepaid $200,000 for our research and development costs which are included
in the statement of operations under product development and prepaid $50,000 in
Consulting Fees which is included in the balance sheet and we anticipate needing
approximately $21,243.32 for expenses associated with this Registration
Statement (See ITEM 13 "Other Expenses if Issuance and Distribution").
Therefore, we presently have a budgeted shortfall of $32,503.68.
Because we have not generated any revenue from our business, and we are 8-10
months away from being in a position to generate revenues, we will need to raise
additional funds for the future development of our business and to respond to
unanticipated requirements or expenses. Management estimates that our current
cash balances will be exhausted by April 2009 provided we do not have any
unanticipated expenses. We do not currently have any arrangements for financing
and we can provide no assurance to investors we will be able to find such
financing.
Our ability to successfully develop our product and to eventually produce and
sell it to generate operating revenues depends on our ability to obtain the
necessary financing to implement our business plan. Given that we have no
operating history, no revenues and only losses to date, we may not be able to
achieve this goal, and if this occurs we will not be able to pay for our
operations and we may go out of business. We will likely need to issue
additional equity securities in the future to raise the necessary funds. We do
not currently have any arrangements for additional financing and we can provide
no assurance to investors we will be able to find such financing if further
funding is required. Obtaining additional financing would be subject to a number
of factors, including investor acceptance of our product and our business model.
The issuance of additional equity securities by us would result in a significant
dilution in the equity interests of our current stockholders. The resale of
shares by our existing shareholders pursuant to this prospectus may result in
significant downward pressure on the price of our common stock and cause
negative impact on our ability to sell additional equity securities. Obtaining
loans will increase our liabilities and future cash commitments.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OUR BUSINESS WILL FAIL
AND YOU WILL LOSE YOUR ENTIRE INVESTMENT.
4
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures, which are currently budgeted at $992,000, of which $250,000 has
been prepaid for the next 12 months for our business plan and an additional
$21,243.32. (See "Plan of Operation".) If such estimates are erroneous or
inaccurate we may not be able to carry out our business plan, which could, in a
worst-case scenario, result in the failure of our business and you losing your
entire investment.
OUR BUSINESS MODEL MAY NOT BE SUFFICIENT TO ENSURE OUR SUCCESS IN OUR INTENDED
MARKET.
Our survival is currently dependent upon the success of our efforts to gain
market acceptance of one product that ultimately represents a small sector in
the overall charger industry. Should our services be too narrowly focused or
should the target market not be as responsive as we anticipate, we may not have
in place alternate products or services that we can offer to ensure our
survival.
IF WE ARE UNABLE TO COMPLETE THE DEVELOPMENT OF OUR PRODUCT WE WILL NOT BE ABLE
TO GENERATE REVENUES AND YOU WILL LOSE YOUR INVESTMENT.
We have not completed the development of our proposed product and we have no
definitive contracts or licenses for the sale or use of our product. The success
of our proposed business will depend on its completion and the acceptance of our
product by the general public. Achieving such acceptance will require
significant marketing investment. Our product, once developed and tested, may
not be accepted by our customers at sufficient levels to support our operations
and build our business. If the proposed product that we will develop is not
accepted at sufficient levels, our business will fail.
WE ARE DEPENDENT ON REVENUES GENERATED BY A SOLE PRODUCT AND THUS WE ARE SUBJECT
TO MANY ASSOCIATED RISKS.
Our revenue will be generated through the sale of our man-powered charger.
Unless we expand our product offerings to include related or other products, our
likely source of revenues for the foreseeable future will continue to be
generated by the man-powered charger. Accordingly, 100% of our revenue will be
dependent upon the sale of our sole product.
If potential users are satisfied with other means for charging their cell phone
battery we may not be able to sell our product.
* If technological developments render man-powered chargers obsolete,
our business could fail;
* our patent application is unsuccessful, our business could fail.
Thus, we may expand our financial resources on marketing and advertising without
generating concomitant revenues. If we cannot generate sufficient revenues to
cover our overhead, manufacturing and operating costs, we will fail.
THERE ARE LOW BARRIERS TO ENTRY INTO THE MAN-POWERED CHARGER INDUSTRY
AND, AS A RESULT, MANY COMPANIES MAY BE ABLE TO COMPETE WITH US ON LIMITED
FINANCIAL RESOURCES.
Our product does not require large capital expenditures for its development or
manufacture. As a result, barriers to entering this industry may be low. If the
intellectual property protection with respect to the man-powered charger product
does not prove effective, a competitor with limited financial resources may be
able to successfully compete with us.
BECAUSE OUR EXECUTIVE OFFICERS AND DIRECTORS LIVE OUTSIDE OF THE UNITED STATES,
YOU MAY HAVE NO EFFECTIVE RECOURSE AGAINST THEM FOR MISCONDUCT AND MAY NOT BE
ABLE TO ENFORCE JUDGMENT AND CIVIL LIABILITIES AGAINST THEM. INVESTORS MAY NOT
BE ABLE TO RECEIVE COMPENSATION FOR DAMAGES TO THE VALUE OF THEIR INVESTMENT
CAUSED BY WRONGFUL ACTIONS BY OUR DIRECTORS AND OFFICERS.
Both of our directors and officers live outside of the United States. Mr. Guy
Ofir, our President and a director is a national and a resident of Israel, and
all or a substantial portion of his assets are located outside of the United
States. Mr. Emanuel Cohen, our Secretary, Treasurer and a director is a national
and a resident of Israel, and all or a substantial portion of his assets are
5
located outside of the United States. As a result, it may be difficult for
investors to enforce within the United States any judgments obtained against our
directors or officers, or obtain judgments against them outside of the United
States that are predicated upon the civil liability provisions of the securities
laws of the United States or any state thereof. Investors may not be able to
receive compensation for damages to the value of their investment caused by
wrongful actions by our directors and officers.
BECAUSE WE HAVE TWO DIRECTORS, DEADLOCKS MAY OCCUR IN OUR BOARD'S
DECISION-MAKING PROCESS, WHICH MAY DELAY OR PREVENT CRITICAL DECISIONS FROM
BEING MADE.
Since we currently only have an even number of directors, deadlocks may occur
when such directors disagree on a particular decision or course of action. Our
Articles and By-Laws do not contain any mechanisms for resolving potential
deadlocks. While our directors are under a duty to act in the best interest of
our company, any deadlocks may impede the further development of our business in
that such deadlocks may delay or prevent critical decisions regarding our
development.
BECAUSE OUR EXECUTIVE OFFICERS ARE EMPLOYED ELSEWHERE, THEY WILL BE UNABLE TO
DEVOTE THEIR SERVICES TO OUR COMPANY ON A FULL TIME BASIS AND THE PERFORMANCE OF
OUR BUSINESS MAY SUFFER, OUR BUSINESS COULD FAIL AND INVESTORS COULD LOSE THEIR
ENTIRE INVESTMENT.
Mr. Guy Ofir, our President and director is employed elsewhere and he will be
unable to devote his services to our company on a full time basis. Mr. Guy Ofir
currently devotes approximately 30 to 40 hours a week to our company. Mr.
Emanuel Cohen, our Secretary, Treasurer and a director, is employed elsewhere
and he will be unable to devote his services to our company on a full time
basis. Mr. Emanuel Cohen currently devotes 15 to 20 hours a week to our company.
As a result, the management of our company could under-perform, our business
could fail and investors could lose their entire investment.
OUR EXECUTIVE OFFICERS HAVE NO EXPERIENCE OR TECHNICAL TRAINING IN THE
DEVELOPMENT, MAINTENANCE AND MARKETING OF MAN-POWERED CHARGER OR IN OPERATING
BUSINESSES THAT SELL PRODUCTS OR SERVICES TO WHOLESALES. THIS COULD CAUSE THEM
TO MAKE INEXPERIENCED OR UNINFORMED DECISIONS THAT HAVE BAD RESULTS FOR OUR
COMPANY. AS A RESULT, OUR OPERATIONS COULD SUFFER IRREPARABLE HARM AND MAY CAUSE
US TO SUSPEND OR CEASE OPERATIONS, WHICH COULD CAUSE INVESTORS TO LOSE THEIR
ENTIRE INVESTMENT.
Mr. Guy Ofir, our President and director and Mr. Emanuel Cohen, our Secretary,
Treasurer and director, have no experience or technical training in the
development, maintenance and marketing of man-powered charger or in operating
businesses that sell products or services to wholesales. Due to their lack of
experience and knowledge in these areas, our executive officers could make the
wrong decisions regarding the development, operation and marketing of our
website and the operation of our business, which could lead to irreparable
damage to our business. Consequently, our operations could suffer irreparable
harm from mistakes made by our executive officers and we may have to suspend or
cease operations, which could cause investors to lose their entire investment.
WE DEPEND HEAVILY ON MR. GUY OFIR AND MR. EMANUEL COHEN. THE LOSS OF EITHER
PERSON WILL HAVE A SUBSTANTIAL NEGATIVE EFFECT ON OUR BUSINESS AND MAY CAUSE OUR
BUSINESS TO FAIL.
We depend entirely on Mr. Ofir and Mr. Cohen for all of our operations. The loss
of either person will have a substantial negative effect on the company and may
cause our business to fail. Our officers did not receive any compensation for
their services and it is highly unlikely that they will receive any compensation
unless and until we generate substantial revenues.
We do not have any employment agreements or maintain key person life insurance
policies on our officers. If our officers do not devote sufficient time towards
our business, we may never be able to effectuate our business plan.
BECAUSE OUR EXECUTIVE OFFICERS CONTROL A LARGE PERCENTAGE OF OUR COMMON STOCK,
THEY HAVE THE ABILITY TO INFLUENCE MATTERS AFFECTING OUR SHAREHOLDERS.
6
Our executive officers, in the aggregate, beneficially own approximately 43% of
the issued and outstanding shares of our common stock. As a result, they have
the ability to influence matters affecting our shareholders, including the
election of our directors, the acquisition or disposition of our assets, and the
future issuance of our shares. Because our executive officers control such
shares, investors may find it difficult to replace our management if they
disagree with the way our business is being operated.
WE HAVE A GOING CONCERN OPINION FROM OUR AUDITORS, INDICATING THE POSSIBILITY
THAT WE MAY NOT BE ABLE TO CONTINUE TO OPERATE.
The Company has incurred net losses of $435,824 for the period from May 17, 2007
(inception) to March 31, 2008. We anticipate generating losses for the next 12
months. Therefore, we may be unable to continue operations in the future as a
going concern. No adjustment has been made in the accompanying financial
statements to the amounts and classification of assets and liabilities which
could result should we be unable to continue as a going concern. If we cannot
continue as a viable entity, our shareholders may lose some or all of their
investment in the Company.
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL
DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR
ABILITY TO OBTAIN FUTURE FINANCING.
For the period from May 17, 2007 (inception) to March 31, 2008, our independent
registered public accounting firm has expressed substantial doubt about our
ability to continue as a going concern. Such doubt was expressed as a result of
our recurring losses and cash flow deficiencies since our inception. We continue
to experience net losses. Our ability to continue as a going concern is subject
to our ability to generate a profit and/or obtain necessary funding from outside
sources, including obtaining additional funding from the sale of our securities,
future sales of our product or obtaining loans and grants from various financial
institutions whenever possible. If we continue to incur losses, it will become
increasingly difficult for us to achieve our goals and there can be no assurance
that our business plan will materialize.
WE WILL BE HEAVILY DEPENDENT ON CONTRACTING WITH THIRD PARTY FIRM(S) TO
MANUFACTURE COMPONENTS FOR US. IF WE ARE UNABLE TO LOCATE, HIRE AND RETAIN THESE
FIRM(S), OUR BUSINESS WILL FAIL.
We intend to hire a third party firm(s) to manufacture the components of our
product. Should we be unable to contract qualified third parties firm(s) to
manufacture because we are unable to find them, are unable to attract them to
our company or are unable to afford them, we will never become profitable and
our business will fail.
RISKS ASSOCIATED WITH OUR COMMON STOCK
BECAUSE WE CAN ISSUE ADDITIONAL COMMON SHARES, PURCHASERS OF OUR COMMON STOCK
MAY INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION.
We are authorized to issue up to 1,000,000,000 common shares, of which
93,186,070 are issued and outstanding. Our board of directors has the authority
to cause our company to issue additional shares of common stock without the
consent of any of our shareholders. Consequently, our shareholders may
experience dilution in their ownership of our company in the future.
A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR ABILITY TO CONTINUE OPERATIONS.
A prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because a significant portion of our operations has been and will be
financed through the sale of equity securities, a decline in the price of our
common stock could be especially detrimental to our liquidity and our
operations. Such reductions may force us to reallocate funds from other planned
uses and may have a significant negative effect on our business plans and
operations, including our ability to develop new products and continue our
current operations. If our stock price declines, we can offer no assurance that
we will be able to raise additional capital or generate funds from operations
sufficient to meet our obligations. If we are unable to raise sufficient capital
in the future, we may not be able to have the resources to continue our normal
operations.
7
The market price for our common stock may also be affected by our ability to
meet or exceed expectations of analysts or investors. Any failure to meet these
expectations, even if minor, may have a material adverse effect on the market
price of our common stock.
TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SECURITIES AND EXCHANGE
COMMISSION'S PENNY STOCK REGULATIONS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO
BUY AND SELL OUR STOCK.
The Securities and Exchange Commission has adopted regulations which generally
define "penny stock" to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities are covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
"accredited investors". The term "accredited investor" refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
NASD SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described above, the National Association
of Securities Dealers (NASD) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
OUR COMMON STOCK IS ILLIQUID AND THE PRICE OF OUR COMMON STOCK MAY BE NEGATIVELY
IMPACTED BY FACTORS WHICH ARE UNRELATED TO OUR OPERATIONS.
Our common stock currently trades on a limited basis on the OTC Bulletin Board.
Trading of our stock through the OTC Bulletin Board is frequently thin and
highly volatile. There is no assurance that a sufficient market will develop in
the stock, in which case it could be difficult for shareholders to sell their
stock. The market price of our common stock could fluctuate substantially due to
a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of our competitors, trading volume
in our common stock, changes in general conditions in the economy and the
financial markets or other developments affecting our competitors or us. In
addition, the stock market is subject to extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance
and could have the same effect on our common stock.
WE DO NOT INTEND TO PAY DIVIDENDS ON ANY INVESTMENT IN THE SHARES OF STOCK OF
OUR COMPANY AND THERE WILL BE FEWER WAYS FOR INVESTORS TO MAKE A GAIN ON ANY
INVESTMENT IN OUR COMPANY.
We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may prohibit the payment of a dividend. Because we do not intend to declare
dividends, any gain on an investment in our company will need to come through an
increase in the stock's price. This may never happen and investors may lose all
of their investment in our company.
8
PLEASE READ THIS PROSPECTUS CAREFULLY. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY
THE PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS PROSPECTUS.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "will" ,"intend"
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors" beginning on page 3, that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results. The safe harbour for forward-looking statements provided in the Private
Securities Litigation Reform Act of 1995 does not apply to the offering made in
this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of our
common stock being offered for sale by the selling stockholders, although we may
receive proceeds of up to $3,937,949 if all of the warrants are exercised. We
expect to use the proceeds received from the exercise of the warrants, if any,
for general working capital purposes. We will incur all costs associated with
this registration statement and prospectus. Our company estimates that the total
costs that will be incurred by our company in connection with the registration
statement and prospectus will be approximately $21,243.32.
DETERMINATION OF OFFERING PRICE
The selling shareholders will determine at what price they may sell the offered
shares, and such sales may be made at fixed prices, at prevailing market prices
at the time of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale or at negotiated prices.
DILUTION
The common stock to be sold by the selling stockholders is the 5,608,833 shares
of common stock that are currently issued and outstanding. Accordingly, there
will be no dilution to our existing stockholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares beneficially owned by the
selling stockholders and certain other information regarding such stockholders,
as of March 31, 2008.
The selling stockholders acquired their securities (1) through a private
transaction exempt from registration pursuant to Regulation S of the Securities
Act of 1933, as amended (the "Act"), pursuant to which we sold to the Meitav
entities listed below (the "Meitav Entities") on February 8, 2008, 367,647
units, each unit being offered for $1.70, for aggregate gross proceeds of
$625,001. Each unit consisted of (i) ten shares of our common stock and (ii)
thirty Class A Warrants. Each Class A Warrant entitles the holder thereof to
purchase one share of common stock at an exercise price of $0.27 per share,
expiring five years from the date of purchase of the Warrant; (2) as
compensation for legal services and services in connection with the facilitation
of the financing of the Company by the Meitav Entities and Tailor Made Capital
Ltd. ("TMC"). In connection therewith, on March 3, 2008, we issued Mr. Victor
Tshuva, 300,000 shares of restricted common stock for an aggregate price of
$3,000 and warrants to purchase 1,000,000 shares of our common stock at an
exercise price of $0.15 for a period of five years; (3) as a commitment fee of
9
882,353 shares of the Company's common stock and a warrant to purchase 3,000,000
shares of the Company's common stock to TMC for arranging the equity line
pursuant to the March 10, 2008 agreement; and (4) 750,000 shares of our common
stock as a consideration for investor relations services to be provided by
Falcon Financial Services LLC.
The shares offered by this prospectus may be offered from time to time by the
selling stockholders. The following table assumes that the selling stockholders
will sell all of the shares being offered for their respective accounts by this
prospectus. However, the selling stockholders may sell some, all or none of
their shares of our common stock offered by this prospectus and we are unable to
determine the exact number of shares that actually will be sold. We do not know
how long the selling stockholders will hold the shares of our common stock
before selling them, and we currently have no agreements, arrangements or
understandings with any of the selling stockholders regarding the sale of any of
the shares of our common stock. The information in the table below is current
only as of the date of this prospectus. None of the selling shareholders had or
have any material relationship with our company or any of its affiliates within
the past three years. To our knowledge, there is also no affiliation among
Victor Tshuva, Falcon Financial Services LLC, the Meitav Entities, TMC and their
beneficial owners. None of the selling shareholders is a broker-dealer or an
affiliate of a broker-dealer. Each shareholder is an adult.
We may require the selling shareholders to suspend the sales of the securities
offered by this prospectus upon the occurrence of any event that makes any
statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in these documents
in order to make statements in those documents not misleading.
In the following table, except as noted below, we have determined the number and
percentage of shares beneficially owned in accordance with Rule 13d-3 of the
Exchange Act, and this information does not necessarily indicate beneficial
ownership for any other purpose. Except as otherwise indicated in the footnotes
below, we believe that each of the selling stockholders named in this table has
sole voting and investment power over the shares of our common stock indicated.
In determining the number of shares of our common stock beneficially owned by a
person and the percentage ownership of that person, we include any shares as to
which the person has sole or shared voting power or investment power, as well as
any shares registered hereby that are subject to outstanding warrants held by
that person and any shares subject to outstanding warrants or options that are
currently exercisable or exercisable within 60 days after March 31, 2008.
Applicable percentages are based on 93,186,070 shares of our common stock
outstanding on March 31, 2008.
Beneficial Ownership Beneficial Ownership
Prior to this Offering(1) After Offering
---------------------------- -----------------------
Number of
Shares Issuable Number of Number
Number of Upon Exercise Shares Being of
Name of Selling Stockholder Shares of Warrants Offered Shares Percent(**)
- --------------------------- ------ ----------- ------- ------ -----------
Victor Tshuva 300,000 1,000,000 1,300,000 0 0
Meitav Gemel Ltd
Meitav Tagmulim Clalit(2) 1,394,120 4,182,360 5,576,480 0 0
Meitav Gemel Ltd
Meitav Histalmut Clalit(2) 947,060 2,841,180 3,788,240 0 0
Meitav Gemel Ltd
Meitav Pizuim Clalit(2) 302,940 908,820 1,211,760 0 0
Meitav Gemel Ltd
Meitav Tagmulim CPI(2) 70,590 211,770 282,360 0 0
10
Meitav Gemel Ltd
Meitav Tagmulim Nis(2) 26,470 79,410 105,880 0 0
Meitav Gemel Ltd
Meitav Tagmulim Shares(2) 67,650 202,950 270,600 0 0
Meitav Gemel Ltd
Meitav Histalmut CPI(2) 23,530 70,590 94,120 0 0
Meitav Gemel Ltd
Meitav Histalmut Nis(2) 5,880 17,640 23,520 0 0
Meitav Gemel Ltd
Meitav Histalmut Shares(2) 38,240 114,720 152,960 0 0
Meitav Gemel Ltd
Meitav Chisachon Gemel(2) 229,410 688,230 917,640 0 0
Meitav Gemel Ltd
Meitav Chisachon Histalmut(2) 164,710 494,130 658,840 0 0
Meitav Gemel Ltd
Meitav Chisachon Pizuim(2) 33,530 100,590 134,120 0 0
Meitav Gemel Ltd
Meitav Yerushalayim Gemel Bound 85(2) 11,180 33,540 44,720 0 0
Meitav Gemel Ltd
Meitav Yerushalayim Gemel Zahav(2) 12,350 37,050 49,400 0 0
Meitav Gemel Ltd
Meitav Yerushalayim Histalmut Bound 85(2) 4,710 14,130 18,840 0 0
Meitav Gemel Ltd
Meitav Yerushalayim Histalmut Zahav(2) 4,710 14,130 18,840 0 0
Meitav Pension Ltd
Meitav Pensia Makifa(2) 58,820 176,460 235,280 0 0
Meitav Pension Ltd
Meitav Pensia Clalit(2) 2,350 7,050 9,400 0 0
Meitav Mishan Ltd
Meitav Gemel Plus(2) 205,880 617,640 823,520 0 0
Meitav Mishan Ltd
Meitav Histalmut Plus(2) 55,880 167,640 223,520 0 0
Meitav Mishan Ltd
Meitav Pizuim Plus(2) 16,470 49,410 65,880 0 0
Tailor Made Capital(2) 882,353 3,000,000 3,882,353 0 0
Meitav Entities and Tailor Made
Capital as a group (2) 4,558,833 14,029,440 18,588,273(3) 0 0
Falcon Financial Services LLC 750,000 -- 750,000 0 0
---------- ---------- ---------- ----- -----
TOTAL 5,608,833 15,029,440 20,638,273 0 0
========== ========== ========== ===== =====
- ----------
* Less than one percent.
** These figures assume that the selling stockholders will sell all of their
shares available for sale during the effectiveness of the registration
statement that includes this prospectus. The selling shareholders are not
required to sell their shares.
(1) "Prior to this Offering" means prior to the offering by the selling
stockholders of the securities registered under this prospectus for resale.
11
(2) An entity controlled by Meitav Investment House Ltd, ("Meitav") which as
reported on Schedule 13G filed on March 19, 2008, is beneficially owned by
Messrs. Zvi Stepak and Shlomo Simanovsky through intermediary entities.
Messrs. Zvi Stepak and Shlomo Simanovsky may exercise shared voting and
investment powers with respect to all shares owned by Meitav and the Meitav
Entities.
(3) In an appendix to the warrant issued by the Company to the Meitav Entities
and TMC the following exercise limitations have been agreed to: the company
shall not effect the exercise of the warrant and the holder shall not have
the right to exercise any portion of the warrant to the extent that after
giving effect to such issuance after exercise, such holder along with its
affiliates (which include all of Meitav Entities and TMC) shall have more
than 9.99% of the number of shares of common stock outstanding of the
Company. This provision however, may be waived by the holder at its
election upon not less than 61 days' notice to the Company.
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell all or a portion of the
shares of common stock on any market upon which the common stock may be listed
or quoted (currently the National Association of Securities Dealers OTC Bulletin
Board in the United States), in privately negotiated transactions or otherwise.
Such sales may be at fixed prices prevailing at the time of sale, at prices
related to the market prices or at negotiated prices.
The distribution of such shares may be effected by the selling stockholders in
one or more of the following methods:
* ordinary brokers transactions, which may include long or short sales,
* transactions involving cross or block trades on any securities or
market where our common stock is trading,
* purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus,
"at the market" to or through market makers or into an existing market
for the common stock,
* in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents
* through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
* any combination of the foregoing.
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales, if short sales were permitted, of
shares in the course of hedging the positions they assume with the selling
shareholders. The selling stockholders may also enter into option or other
transactions with broker-dealers that require the delivery by such
broker-dealers of the shares, which shares may be resold thereafter pursuant to
this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they may sell as principal,
or both (which compensation as to a particular broker-dealer may be in excess of
customary commissions). The selling shareholders and any broker-dealers acting
in connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933,
and any commissions received by them and any profit realized by them on the
resale of shares as principals may be deemed underwriting compensation under the
Securities Act of 1933. The amount of such compensation cannot be estimated at
this time. We know of no existing arrangements between the selling shareholders
and any other shareholder, broker, dealer, underwriter or agent relating to the
sale or distribution of the shares.
We can provide no assurance that all or any of the common stock offered will be
sold by the selling stockholders named in this prospectus. The estimated costs
of this Offering are $21,243.32. We are bearing all costs relating to the
registration of the common stock. The selling stockholders, however, will pay
any commissions or other fees payable to brokers or dealers in connection with
any sale of the common stock.
The selling stockholders named in this prospectus must comply with the
requirements of the Securities Act and the Exchange Act in the offer and sale of
the common stock. The selling stockholders and any broker-dealers who execute
sales for the selling stockholders may be deemed to be an "underwriter" within
the meaning of the Securities Act in connection with such sales. In particular,
during such times as the selling stockholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may among other things:
12
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to time,
as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Exchange Act.
If an underwriter is selected in connection with this Offering, an amendment
will be filed to identify the underwriter, disclose the arrangements with the
underwriter, and we will file the underwriting agreement as an exhibit to this
prospectus.
The selling stockholders should be aware that the anti-manipulation provisions
of Regulation M under the Exchange Act will apply to purchases and sales of
shares of common stock by the selling stockholders, and that there are
restrictions on market-making activities by persons engaged in the distribution
of the shares. Under Regulation M, the selling stockholders or their agents may
not bid for, purchase, or attempt to induce any person to bid for or purchase,
shares of our common stock while such selling stockholder is distributing shares
covered by this prospectus. Accordingly, the selling stockholders are not
permitted to cover short sales by purchasing shares while the distribution is
taking place. The selling stockholders are advised that if a particular offer of
common stock is to be made on terms constituting a material change from the
information set forth above with respect to the Plan of Distribution, then, to
the extent required, a post-effective amendment to the accompanying registration
statement must be filed with the SEC.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency basis
or had, or is to receive, in connection with the offering, a substantial
interest, directly or indirectly, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
DESCRIPTION OF BUSINESS
OVERVIEW OF THE COMPANY
We are a development stage company in the business of developing battery
charging solutions for small hand-carried devices. We were incorporated on May
17, 2007, in the State of Nevada. We have never declared bankruptcy, have never
been in receivership, and have never been involved in any legal action or
proceedings.
OBJECTIVES
Our product is a man-powered generator for recharging cellular phones and small
batteries. We plan to develop a palm-sized device named YoGen, intended to
provide a quick recharge for cell phones and other personal electronic devices
operating on AA or AAA batteries. Prior to incorporation, our President and
Director, Mr. Guy Ofir, started developing a prototype of the man-powered
generator. We will focus our efforts on developing a product that will be rugged
enough to withstand constant use. It will be shockproof with a suspension system
that maintains the unit in an available state of readiness but not in the user's
way. We plan to keep the controls of the product as user-friendly as possible
with the design of the casing intended to appeal to personal electronic
gadget-lovers in general and more specifically to the younger market segment
which is the largest consumer of disposable batteries.
Our President and Director, Mr. Guy Ofir, purchased the rights to the design and
the patent application in a private transaction. Mr. Guy Ofir transferred those
rights to the company at no cost to us.
We plan to complete the development of the man-powered charger solution for
battery powered small hand-carried devices. On August 20, 2007, we filed a
patent application (Application No.: 11/841,046) with the United States Patent
and Trademark Office. By August 19, 2008, in order to extend the potential
patent protection beyond the United States, we needed to file an international
patent application via the PCT. Indeed, we made such filing on June 30, 2008.
The international filing enables us to file a national patent application in any
PCT country until February 19, 2009 and still claim the benefit of the priority
date of August 20, 2007. The Company's principal business plan is to complete
13
the development of the prototype and then manufacture and market the product and
seek third party entities interested in licensing the rights to manufacture and
market the man-powered charger. We are currently engaged in completion of final
design of the YoGen before passing the certification procedure required to
commence mass production.
To enable the power capability and provide minutes of operation without fatigue
the YoGen device will generate 20 watts of peak power for each cord pull. It is
designed as a very low profile device fitting into the overall size of 45mm x
70mm x 18mm. A novel design uses a combination of a permanent magnet disk rotor
and integrated stator coils without an iron core and an attached mechanical
drive contribute to the high power and efficiency of the generator. To keep the
unit flat, a simple speed multiplication concept is designed instead of complex
gear mechanism. Furthermore, the magnitude of the inertia extends the effective
generation cycle after the pulling cycle has ceased, thus making for more
effective charging. Designed as a belt attachment, it can be operated with
either hand, adding further to its ergonomics capabilities by dividing and
lowering the required human strength.
Our Secretary, Treasurer and Director, Mr. Emanuel Cohen, will be in charge of
minimizing the size of our product and complete a series of quality tests.
Our product package will consist of a disk generator and the mechanical system
to activate it, an intermittent accumulator battery, an electronic system, a
strong protective casing and a strap for suspending it from a belt.
In the future, if we generate revenue from the sale of our man-powered slim
charger, we plan to sell accessories such as adapters for common hand-held
electrical devices.
TECHNICAL BRIEF:
Controls for
safe charging/ Applicable for
State of up-scaling
Time to recharge 10% Ease of usage internal and for larger
Power capacity of typical 1000 Ergonomic external battery application
Autonomy Level Capability mA/hr Li-ion Battery design indications laptops
- -------------- ---------- -------------------- ------ ----------- -------
Complete autonomy 20 watts max 6-10 minutes Ergonomic Internal and Yes
+ wall charger from the device internal design for arm external Tandem design of
battery pulling. batteries 2 generators
charging with common
~ 2 minutes to replace Belt attached indicating shaft will
the energy in the to enable LEDS produce up to
internal battery by single hand 40 watts
the hand generator charging
Cellular phones consume electric power at a rate which fits to cell antennas,
and the like. For example, cell phone power consumption for conversation mode
(50% talking / 50% listening) near to a cellular antenna is approximately 0.5
watts. Since nominal YoGen output is 5 watts (ten times higher), for every five
minutes of cell phone usage under these conditions, our device can replace the
energy consumed in 30 seconds. This data only applies to short conversations
(typically up to 5 minutes) because during short conversations, a cell phone
battery's state-of-charge does not change significantly. For example, a half
hour conversation under these conditions shall require about 3 minutes to be
brought to its pre-conversation charge state. In all cases, the charge is
proportional to incremental levels of effort.
The efficiency with which our YoGen device recharges cell phone is significantly
dependent on the phone's dedicated built-in charging controller which regulates
maximum charging current. For a majority of up-to-date cellular phone models,
these controllers permit a charging current supplying about 5 watts, which is
the output of our device. A few older cellular phone models permit less of a
charge. For those phones, YoGen is equipped with a switch for a "lower power"
mode.
As indicated before, the YoGen device will generate 20 watts of peak power for
each cord pull. 20W is a peak instant power which an internal alternator can
generate when the cord is pulled very quickly. It is a pure technical
characteristic which was possible to measure only in a laboratory by accessing
YoGen's internal points. We have not used any external third party testing in
connection with this process.
14
YoGen is based on a novel axial-field synchronous generator (alternator)
producing an alternating voltage of frequency and amplitude which are
proportional to its rotation speed. Since it is driven by reciprocating
pull-release hand movement and is outputting energy during rotation, its voltage
and frequency vary considerably through the period.
Cellular phone battery controllers require a definite voltage and internal
impedance of chargers to allow them to charge the batteries. YoGen includes an
electronic converter outputting a stabilized DC voltage falling under load to
emulate required impedance. YoGen has 2 modes: "nominal power" (with nominal
impedance) and "lower power" (with higher impedance).
In its basic format, YoGen includes an internal 400/800 mAh Li-ione buffer
(back-up) battery considerably widening the stabilized power output from zero
pulling speed (the battery gives power) up to pulling high speed (the battery
receives power).
The foregoing statistics are based solely on our own limited internal testing
and have not been verified by an outside testing agency. We are now working to
validate these results in external laboratories. To date, we have produced three
prototypes of our device, each with an internal battery but without a "lower
power" option. These prototypes have been tested in our laboratory with
approximately 15 cellular phone models. Our results confirm the statistics
contained above, provided that the pulling process is done correctly.
MARKETING STRATEGY
We plan to market our product in the United States by establishing a network of
wholesalers who can promote our product to the retail market such as 7-Eleven,
Wal-Mart and other high-traffic locations and points-of-sale which cater to
electronic accessories such as Office Depot, Radio Shack and Circuit City.
We plan to offer our product at a comparable price to other re-charging systems,
we will stress advantages such as clean energy source, use with a wide array of
products and dependability. The end-user should be able to purchase a unit for
$30 to $50 depending on packaging and features.
Our President and Director, Mr. Guy Ofir, will be in charge of executing the
marketing plan.
We have budgeted $250,000 for this purpose.
THE MARKET OPPORTUNITY
Our target market consists of the following market segments: cellular phones,
which are our main initial market, laptops and notebooks, mobile hand held
computers: PDAs, GPS devices and smart phones and digital still cameras and
camcorders., all of which are markets with tremendous growth opportunities.
COMPETITION
Competition within the re-charger systems industry is intense. Many of our
competitors have longer operating histories, greater financial, sales, marketing
and technological resources and longer established client relationships than we
do. Solutions currently marketed for the problem Easy Energy addresses include
several different groups of products, each with its own advantage and
disadvantage. Although there are several other ways of recharging batteries for
a cell phone, the only ones we know of that are in direct competition are the
hand-held human powered chargers. Such competitors include:
IST Design Inc.'s Sidewinder hand charger has a crank-operated mechanism.
Sidewinder is designed and produced by ElectroHiFi, LLC as the SOS Charger.
Sidewinder is claimed to generate 6 minutes of talk time for every 2 minutes of
turning at 2 revolutions per second. The unit currently sells for $19.95 to
$24.95.
Aladdinpower Inc. has a hand-squeeze generator, meant primarily for cell phones,
which has been on the market since 2002. Although it claims to be useable with
any rechargeable battery, it produces only 1.6 watts, which may not be effective
in recharging a cell phone. It is currently priced at around $60.
Freeplay Energy plc has developed Freeplay Freecharge, a Freecharge mobile phone
charge, available in the market since 2002. This product has ergonomic features,
including reverse winding. It claims that talk time of 2-3 minutes (depending on
the mobile phone used), or several hours of standby time, can be achieved with
15
45 seconds of winding. Its internal battery is a rechargeable NiMH battery pack,
3.6 Volts, 1300 mAh. It is currently priced at $59.95 per unit.
There are other products in the market, but normally, such products are
unbranded copies of the above mentioned designs.
We seek to differentiate ourselves by providing a slimmer and lighter generator
at a competitive price.
DESCRIPTION OF PROPERTY
Our executive and head office is located at Suite 105 - 5348 Vegas Dr., Las
Vegas, NV 89108. Our office is rented on a month to month sub-lease at a cost of
$50 per month. We also have an office in Israel at 26 Ga'aton Blvd., Nahariya
22401, which is provided to us free of charge by our directors. We believe that
our office space and facilities are sufficient to meet our present needs and do
not anticipate any difficulty securing alternative or additional space, as
needed, on terms acceptable to us.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 1,000,000,000 common shares with a par value of
$0.00001. As of July 1, 2008 there were 93,186,070 shares of our common stock
issued and outstanding.
Upon liquidation, dissolution or winding up of the corporation, the holders of
common stock are entitled to share ratably in all net assets available for
distribution to shareholders after payment to creditors. The common stock is not
convertible or redeemable and has no pre-emptive, subscription or conversion
rights. There are no conversion, redemption, sinking fund or similar provisions
regarding the common stock. Each outstanding share of common stock is entitled
to one vote on all matters submitted to a vote of shareholders. There are no
cumulative voting rights.
Each shareholder is entitled to receive the dividends as may be declared by our
directors out of funds legally available for dividends and, in the event of
liquidation, to share pro rata in any distribution of our assets after payment
of liabilities. Our directors are not obligated to declare a dividend. Any
future dividends will be subject to the discretion of our directors and will
depend upon, among other things, future earnings, the operating and financial
condition of our company, our capital requirements, general business conditions
and other pertinent factors. It is not anticipated that dividends will be paid
in the foreseeable future.
There are no provisions in our articles of incorporation or our bylaws that
would delay, defer or prevent a change in control of our company.
PREFERRED STOCK
We are authorized to issue 50,000,000 shares of preferred stock with a par value
of $0.0001. As of July 1, 2008 there were no preferred shares issued and
outstanding.
WARRANTS
As of April 22, 2008, there were outstanding warrants to purchase 3,000,000
shares of our common stock at an exercise price of $0.27 per share, which were
issued in conjunction with the Private Placement we undertook in March 10, 2008.
These warrants expire on March 10, 2013.
As of April 22, 2008, there were outstanding warrants to purchase 1,000,000
shares of our common stock at an exercise price of $0.15 per share, which were
issued in conjunction with the Private Placement we undertook in March 3, 2008.
These warrants expire on March 3, 2013.
As of April 22, 2008, there were outstanding warrants to purchase 11,029,440
shares of our common stock at an exercise price of $0.27 per share, which were
issued in conjunction with the Private Placement we undertook in February 28,
2008. These warrants expire on February 28, 2013.
16
TRANSFER AGENT AND REGISTRAR
We have appointed the following transfer agent for our shares of common stock:
Holladay Stock Transfer, Inc., 2939 North 67th Place, Suite C, Scottsdale, AZ
85251, Telephone: (480) 481-3940; Facsimile: (480) 481-3941. The transfer agent
is responsible for all record-keeping and administrative functions in connection
with the common shares.
LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
Officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our interest.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our stock is listed for quotation on the OTC Bulletin Board under the trading
symbol "ESYE.OB". Our common shares initially began trading on the OTC Bulletin
Board on December 26, 2007. The following table sets forth, for the periods
indicated, the high and low closing prices for each quarter within the last
fiscal year ended December 31, 2007 and subsequent interim period as reported by
the quotation service operated by the OTC Bulletin Board. All quotations for the
OTC Bulletin Board reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
Year 2007 High Low
--------- ---- ---
Fourth Quarter $0.30 $0.15
Year 2008 High Low
--------- ---- ---
First Quarter $0.30 $0.15
HOLDERS
On July 1 2008, the closing price of our common stock as reported on the OTC
Bulletin Board was $0.30 per share. On April 22, 2008, we had approximately 62
holders of records of common stock and 93,186,070 shares of our common stock
were issued and outstanding, plus an additional 15,029,440 shares issuable upon
the exercise of outstanding warrants. Some of our shares are held in brokers'
accounts, so we are unable to give an accurate statement of the number of
shareholders.
DIVIDEND POLICY
We have not declared or paid any cash dividends since inception. We do not
intend to pay any cash dividends in the foreseeable future. Although there are
no restrictions that limit our ability to pay dividends on our common stock, we
intend to retain future earnings for use in our operations and the expansion of
our business. Our future dividend policy will be determined from time to time by
our Board of Directors.
To the extent that we require additional funding our funding sources may
prohibit the payment of a dividend. Because we do not intend to declare
dividends, any gain on an investment in our company will need to come through an
increase in the stock's price, which may never happen.
EQUITY COMPENSATION PLAN INFORMATION
As of July 1, 2008 and as of December 31, 2007, the end of our most recently
completed fiscal year, our company did not have any equity compensation plan.
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND RELATED NOTES THAT APPEAR ELSEWHERE IN THIS
PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE DISCUSSED IN "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS
PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH
THEY ARE MADE. WE UNDERTAKE NO OBLIGATION TO UPDATE SUCH STATEMENTS TO REFLECT
EVENTS THAT OCCUR OR CIRCUMSTANCES THAT EXIST AFTER THE DATE ON WHICH THEY ARE
MADE.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months. We do not anticipate that we
will generate significant revenues until we have completed the development and
manufacturing of our product. We plan to develop a man-powered charger solution
for battery powered small hand-carried devices.
On August 20, 2007 we filed a patent application (Application No.: 11/841,046)
with the United States Patent and Trademark Office. Prior to our incorporation,
Mr. Guy Ofir, Our President and Director started developing a prototype of the
man-powered generator. This prototype is a "successor" of several practically
validated approaches suggested by its inventors as outlined below:
- Charger shall be powerful enough to provide a significantly higher
talk-to-charge time ratio (current models operate at about 1:1);
- Charger shall include a converter providing both utilization of input
mechanical energy through the entire speed range and stabilized
electric output;
- Charger shall have an option to include a back-up internal battery;
- Charger size shall be not greater than those of today's cell-phones
and should be as thin as possible; and
- Mechanical input shall be of a reciprocating pull-release type since
such a hand application allows for extended use without tiredness.
This product is based on a novel dedicated application of the unique high
power-density planar alternator technology developed and tested by one of the
inventors.
This technology allows for implementation of these principles since and makes it
possible to provide an extremely slim and unique compact package containing all
charger components, which include: mechanical transmission electronic converter,
back-up battery and the alternator itself.
The technology of the proposed product was invented by Alexander Sromin and
Michael Fridhendler. Mr. Sromin is an alumnus of the Academy for Aviation &
Space Instruments in St. Petersburg, Russia with 22 years of research and
development experience related to a wide range of electric machines and
electromechanical systems. His professional scope covers compact permanent
magnet motors, actuators (including linear, rotating, reciprocating, multi-axis,
etc.) and generators in the range from MEMS up to 100 KW. He is an author of
more than 30 articles and inventor of 10 inventions. Mr. Friedhendler graduated
from The Technion University in Haifa, Israel. He has 25 years of experience in
multi-disciplinary hi-tech ventures promotion and technological support. He
succeeded in numerous application projects in the field of mobile and internet
GPS and J2ME software projects among others. His expertise relates to
electronics, communications, cellular technology, internet and video data
transfer.
Both Mr. Sromin and Mr. Fridhendler worked for Pipera Technologies Ltd.
("Pipera"), a company wholly owned and fully funded by our president and
director, Mr. Ofir, and during the course of their work, developed the
technology of the proposed product. Mr. Sromin and Mr. Fridhendler have been
assisted by Mr. Roman Lanzet that serves as production manager at Pipera. Mr.
Sromin, Mr. Fridhendler and Mr. Lanzet assigned their rights in the technology
of the product to the Company for no consideration pursuant to the terms of the
assignment agreement dated August 15, 2007 filed by the Company as exhibit 10.3
to the Company's registration statement on Form SB-2 filed on October 24, 2007.
18
On January 29, 2008 we announced the completion of the fully working prototype
of the man-powered charger solution for battery powered small hand-carried
devices. Such prototype is designed for testing the principles behind the
product. The Company's principal business plan is to complete the manufacturing
design, mainly minimizing the product and improving human engineering of the
product and then manufacture and market the product and / or seek third party
entities interested in licensing the rights to manufacture and market our
product. We estimate that we could begin the manufacturing of the products
during the third quarter of 2008. We have selected a contractor to assist us
with this process. We estimate the costs to be incurred by the time we have an
operating manufacturing line ready for mass production to be at approximately
$400,000.
Our business objectives are:
- To complete the design of our product.
- To engage third parties firm(s) to manufacture the components of our
product.
- To set up an assembly line. - To be a leading provider of man-powered
charger.
- To execute our marketing plan.
Our goals over the next 12 months are:
- Develop and manufacture a first product suited to cellular phone use.
- Explore potential distributors for our product.
ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTH PERIOD:
Anticipated Target Date
Costs For Completion
----- --------------
PHASE I - COMPLETING THE DEVELOPMENT $100,000* Mar, 2008 -
>> R&D activities related to development of our product. May, 2008
>> Minimizing the size of our product.
>> Protection of intellectual property rights.
PHASE II - MANUFACTURE A PROTOTYPE $300,000** Apr, 2008 -
>> Refinement of working prototypes. Jun, 2008
>> Seeking suppliers for the components for our product.
>> Set up an assembly line.
PHASE III - MARKETING PLAN $250,000 Jul, 2008 -
>> Full product release. Apr, 2009
>> Development of marketing plan aimed at specified markets.
TOTAL $650,000 12 MONTHS
- ----------
* Which is included in the $200,000 total of Product Development on the
Statement of Operations.
** Of which we prepaid $100,000 and is included in the $200,000 total of
Product Development on the Statement of Operations.
In addition to the costs outlined above, we anticipate that we will incur over
the next twelve months the following expenses:
Planned Expenditures Over
Category The Next Twelve Months
-------- ----------------------
Consultant Compensation $100,000***
Legal Fees $ 80,000
Accounting Fees $ 25,000
Auditor's Fees $ 25,000
General and administrative expenses $ 20,000
Fees related to our patent application. $ 22,000
TOTAL $272,000
- ----------
*** Of which we prepaid $50,000 and included in the balance sheet under Prepaid
Expenses.
19
RESULTS OF OPERATIONS
During the three months ended March 31, 2008 the company incurred operating
expenses of $406,972 which include $200,000 of product development costs,
$202,497 in professional fees related to accounting and legal and $4,475 of
general and administrative expenses. These operating costs were offset by $1,260
of interest income.
Net Loss
Our company incurred a loss of $405,712 for the period ended March 31, 2008,
resulting from $371,942 of cash used in operating activities offset by an
increase in prepaid expenses of $50,000 from the period ended December 31, 2007.
LIQUIDITY AND CAPITAL RESOURCES
To date, we have had negative cash flows from operations and we have been
dependent on sales of our equity securities and debt financing to meet our cash
requirements. We expect this situation to continue for the foreseeable future.
We anticipate that we will have negative cash flows from operations in the next
twelve month period.
As of March 31, 2008, we had cash of $725,747, representing a net increase in
cash of $653,059 since December 31, 2007. Cash generated by financing activities
during the three months ended March 31, 2008 amounted to $1,025,001 resulting
from the sale of stock in private placements during February and March of 2008.
Cash used in operations amounted to $371,942 represented by a loss of $405,712
offset by an increase in prepaid expenses from the previous balance sheet of
$50,000 and non-cash adjustments for contributed capital and common stocks and
warrants issued for services totaling $83,770.
As indicated above, our estimated working capital requirements and projected
operating expenses for the next twelve month period total $992,000, of which
$250,000 has been prepaid. We anticipate that such funds will not be sufficient
to pay our estimated expenses for the next twelve month period. We intend to
fulfill any additional cash requirement through the sale of either equity or
debt. Historically we have financed our operation through the sale of equity. On
August 27, 2007, we closed a private placement for 30,333,190 common shares at a
price of $0.003 per share, or an aggregate of $91,000. On February 28, 2008, we
commenced a private placement offering of 367,647.6 units, each unit being
offered for $1.70, for aggregate gross proceeds of $625,001. Each unit consisted
of (i) ten common stock shares, (ii) thirty Class A Warrant. Each Class A
Warrant entitles the holder thereof to purchase one share of common stock at an
exercise price of $0.27 per share, expiring five years from the date of
purchase. This offering was made to non-U.S. persons in offshore transactions
pursuant to the exemption from registration provided by Regulation S of the
Securities Act. We agreed to register the shares and warrants issued in this
transaction on a registration statement. On that same date, we also sold and
issued 208,333 common stock shares under Rule 903 of Regulation S of the Act to
an accredited investor for the aggregate purchase price of US $50,000, or a
purchase price of US $0.24 per share.
On March 10, 2008, we entered into a Securities Purchase Agreement and a
Registration Rights Agreement with Tailor Made Capital, Ltd. ("TMC") relating to
the issuance to TMC of 882,353 shares of our common stock, par value $0.0001 per
share, and a warrant to purchase up to 3,000,000 shares of the Company's common
stock at a price of $0.27 per share (the "Warrant"). The Warrant shall be in
effect for five years from the date that the Company's common stock is initially
listed or quoted for trading on a trading market. The Securities Purchase
Agreement further provided that, at the Company's demand, TMC will purchase up
to an additional $1,000,000 of shares of the Company's common stock commencing
immediately after the date that the shelf registration of the Company's shares
that are subject to the Securities Purchase Agreement is declared effective (the
"Put").We agreed to file a registration statement to register all of the shares
of common stock to be issued pursuant to the Securities Purchase Agreement,
including those shares issuable upon the exercise of the Warrant and the Put.
On March 25, 2008, we entered into a subscription agreement under which we
undertook to issue 2,000,000 shares for a cash payment of $50,000 by an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act of 1933, and, in consideration for services provided, warrants to
purchase 1,000,000 shares of the Company's common stock at an exercise price of
$0.10 for a period of three years.
On March 27, 2008, (pursuant to an agreement dated January 16, 2008) we issued
4,285,714 common stock shares to an "accredited investor" for the aggregate
purchase price of US $300,000, purchase price of $0.07 per share.
20
We have used our stock as form of consideration for certain services provided to
us and intend to continue to do so in selected contracts from time to time.
There are no assurances that we will be able to obtain funds required for our
continued operation. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain additional financing
on a timely basis, we will not be able to meet our other obligations as they
become due and we will be forced to scale down or perhaps even cease the
operation of our business.
Given that we are a development stage company and have not generated any
revenues to date, our cash flow projections are subject to numerous
contingencies and risk factors beyond our control, including market acceptance
of our products, competition from well-funded competitors, and our ability to
manage our expected growth. We can offer no assurance that our company will
generate cash flow sufficient to meet our cash flow projections or that our
expenses will not exceed our projections. If our expenses exceed estimates, we
will require additional monies during the next twelve months to execute our
business plan.
There is substantial doubt about our ability to continue as a going concern as
the continuation of our business is dependent upon obtaining further long-term
financing, successful development of our technologies into a marketable product
and successful and sufficient market acceptance of our products once developed
and, finally, achieving a profitable level of operations. The issuance of
additional equity securities by us could result in significant dilution of the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
GOING CONCERN
Due to the uncertainty of our ability to meet current operating and capital
expenses, our independent auditors included an explanatory paragraph regarding
substantial doubt about our ability to continue as a going concern in their
audit report for the period ended March 31, 2008.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not expect to purchase any significant equipment over the twelve months.
EMPLOYEES
Currently our only employees are our directors and officers. We do not expect
any other material changes in the number of employees over the next 12 months.
OFF-BALANCE SHEET ARRANGEMENTS
Our company does not have any off-balance sheet arrangements, including any
outstanding derivative financial statements, off-balance sheet guarantees,
interest rate swap transactions or foreign currency contracts. Our company does
not engage in trading activities involving non-exchange traded contracts.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles used in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our financial statements
is critical to an understanding of our financials.
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
21
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective its inception.
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity.
DIVIDENDS
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" and FIN 48. SFAS No. 109
requires the use of an asset and liability approach in accounting for income
taxes.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company to
utilize the loss carry-forward.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We engaged the firm of Moore & Associates Chartered to audit our financial
statements for the period ended March 31, 2008. There has been no change in the
accountants and no disagreements with Moore & Associates Chartered, on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope procedure.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
All directors of our company hold office until the next annual meeting of the
shareholders or until their successors have been elected and qualified. The
executive officers of our company are appointed by our board of directors and
hold office until their death, resignation or removal from office. Our directors
and executive officers, their ages, positions held, and duration as such, are as
follows:
22
Position Held Date First Elected
Name with the Company Age or Appointed
---- ---------------- --- ------------
Guy Ofir President and Director 35 May 17, 2007
Emanuel Cohen Secretary, Treasurer and Director 58 May 17, 2007
BUSINESS EXPERIENCE:
The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's business experience, principal occupation during the
period, and the name and principal business of the organization by which they
were employed.
MR. GUY OFIR
Mr. Guy Ofir has been serving as our President and a member of our Board of
Directors since May 17, 2007. The term of his office is for one year and is
renewable on an annual basis.
Mr. Ofir is an attorney and owns a law firm in Israel which specializes in
corporate and international law. His law firm employs several lawyers and
represents over 100 companies.
In addition to his work as a lawyer, he also manages investments and companies
in Romania. His main company (Guy Ofir & Co. SRL) deals with land and properties
in Bucharest.
MR. EMANUEL COHEN
Mr. Cohen has been serving as our Secretary, Treasurer and a member of our Board
of Directors since May 17, 2007. The term of his office is for one year and is
renewable on an annual basis.
Mr Cohen is a major shareholder and a director of several privately owned
companies in Israel & in the United States. His specialialty includes land,
properties & fabrics. (Amitex & Emday Ltd- one of the biggest Israeli fabric
companies ). He is also a shareholder in private companies which hold land &
properties in Israel. - (Lev Hazom Ltd), (Hafia Zamin Ltd), (Leved Adi
Properties Ltd) & (Mashko Ltd).
In addition to his activities in Europe & Israel, he is also a shareholder in
the following companies which hold land & properties in the USA .- (Echo
investments LLC), (Bilou Capital investment LLC) & (Eden Associated LLC).
Previously he was an officer in Israel's largest bank, Bank of Israel (Israel
Hapoalim Bank).
FAMILY RELATIONSHIPS:
There are no family relationships among our directors or executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our directors, executive officer and control person have not been involved in
any of the following events during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences');
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
23
4. being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
COMMITTEES OF THE BOARD:
All proceedings of the board of directors for the year ended December 31, 2007
were conducted by resolutions consented to in writing by board of directors and
filed with the minutes of the proceedings of the director. Our company currently
does not have nominating, compensation or audit committees or committees
performing similar functions nor does our company have a written nominating,
compensation or audit committee charter. Our officers and directors believe that
it is not necessary to have such committees, at this time, because the functions
of such committees can be adequately performed by the board of directors.
Our company does not have any defined policy or procedural requirements for
shareholders to submit recommendations or nominations for directors. The board
of directors believes that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently have
any specific or minimum criteria for the election of nominees to the board of
directors and we do not have any specific process or procedure for evaluating
such nominees. Our board of directors, as the case may be, will assess all
candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment.
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request addressed to our President and director, Guy Ofir,
at the address appearing on the first page of this prospectus.
AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that we do not have a board member that
qualifies as an "audit committee financial expert" as defined in Item 401(e) of
Regulation S-B, nor do we have a Board member that qualifies as "independent" as
the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities
Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the NASD
Rules.
We believe that our board of directors is capable of analysing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. The board of directors of our company does not believe that
it is necessary to have an audit committee because management believes that the
functions of an audit committee can be adequately performed by our board of
directors. In addition, we believe that retaining an independent director who
would qualify as an "audit committee financial expert" would be overly costly
and burdensome and is not warranted in our circumstances given the stage of our
development and the fact that we have not generated any positive cash flows from
operations to date.
CONFLICT OF INTEREST
None of our officers or directors is subject to a conflict of interest.
EXECUTIVE COMPENSATION
No executive officer of our company received an annual salary and bonus that
exceeded $100,000 during the period from May 17, 2007 (date of inception) to
March 31, 2008.
24
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year(3) Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($)
-------- ------- --------- -------- --------- --------- --------- ----------- --------- ---------
Guy Ofir 2007 Nil Nil Nil Nil Nil Nil Nil Nil
President and 2008 Nil Nil Nil Nil Nil Nil Nil Nil
director(1)
Emanuel Cohen 2007 Nil Nil Nil Nil Nil Nil Nil Nil
Secretary, 2008 Nil Nil Nil Nil Nil Nil Nil Nil
Treasurer and
director(2)
- ----------
(1) Guy Ofir became our President and a director of our company, on May 17,
2007.
(2) Emanuel Cohen became our Secretary, Treasurer and a director of our
company, on May 17, 2007.
(3) We were incorporated on May 17, 2007.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
Since May 17, 2007 (date of inception) to our the period ended March 31, 2008,
we have not granted any stock options or stock appreciation rights to any of our
directors or executive officers.
COMPENSATION OF DIRECTORS
There are no arrangements pursuant to which directors are or will be compensated
in the future for any services provided as a director, unless and until we begin
to realize revenues and become profitable in our business operations.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
We have not entered into any employment agreement or consulting agreements with
our directors and executive officers. There are no arrangements or plans in
which we provide pension, retirement or similar benefits for directors or
executive officers. Our directors and executive officers may receive stock
options at the discretion of our board of directors in the future. We do not
have any material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to our directors or executive officers,
except that stock options may be granted at the discretion of our board of
directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 22, 2008 certain information with
respect to the beneficial ownership of our common stock by each shareholder
known by us to be the beneficial owner of more than 5% of our common stock and
by our current directors and executive officers. The shareholder has sole voting
and investment power with respect to the shares of common stock, except as
otherwise indicated. Beneficial ownership consists of a direct interest in the
shares of common stock, except as otherwise indicated.
25
Name and Address Amount and Nature of Percent of
of Beneficial Owner Title of Class(1) Beneficial Ownership Class(2)
- ------------------- ----------------- -------------------- --------
Guy Ofir Common Shares 20,000,000 21.5%
40 Baz St., Karmiel 20100 Direct
Israel.
Emanuel Cohen Common Shares 20,000,000 21.5%
51 Bilu St., Direct
Raanana, Israel.
Shamir Benita Common Shares 5,000,000 5.4%
8 Nafetali Ben Eferaim St. Direct
Dira 21
Rehovot, Israel.
Albert Glinoviecki Common Shares 5,000,000 5.4%
Rehov Dov Fromer 19 Direct
Kiryat Shemuel
Israel
Meir Duke(3) Common Shares and 7,285,714 7.8%
12300 Highgrove Ct, Common Shares Direct
Raistertown, MD Warrants
USA
Meitav Entities and TMC(4), Common Shares and
4 Berkowitz St. Common Shares
Tel Aviv, Israel Warrants 18,588,273 9.99%(5)
Directors and Officers Common Shares 40,000,000 43%
as a group (2 persons)
- ----------
(1) Beneficial ownership is determined in accordance with SEC rules and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to options, warrants and convertible
preferred stock currently exercisable or convertible, or exercisable or
convertible within sixty (60) days, would be counted as outstanding for
computing the percentage of the person holding such options or warrants but
not counted as outstanding for computing the percentage of any other
person.
(2) Based on 93,186,070 shares issued and outstanding as of July 1, 2008.
(3) Includes 1,000,000 shares issuable upon exercise of outstanding common
stock purchase warrants. This information is based solely on Schedule 13D
filed by the beneficial owner on April 16, 2008, describing the holdings of
the beneficial owner as of April 7, 2008.
(4) An entity controlled by Meitav Investment House Ltd, ("Meitav") which as
reported on Schedule 13G filed on March 19, 2008, is beneficially owned by
Messrs. Zvi Stepak and Shlomo Simanovsky through intermediary entities.
Messrs. Zvi Stepak and Shlomo Simanovsky may exercise shared voting and
investment powers with respect to all shares owned by Meitav and the Meitav
Entities. Includes 14,029,440 shares issuable upon exercise of outstanding
common stock purchase warrants. This information is based solely on
Schedule 13G filed by the benecial owner on March 19, 2008, describing the
holdings of the beneficial owner as of March 10, 2008.
(5) In an appendix to the warrant issued by the Company to the Meitav Entities
and TMC the following exercise limitations have been agreed to: the company
shall not effect the exercise of the warrant and the holder shall not have
the right to exercise any portion of the warrant to the extent that after
giving effect to such issuance after exercise, such holder along with its
affiliates (which include all of Meitav Entities and TMC) shall have more
than 9.99% of the number of shares of common stock outstanding of the
Company. This provision however, may be waived by the holder at its
election upon not less than 61 days' notice to the Company.
26
CHANGES IN CONTROL
We are unaware of any contract, or other arrangement or provision of our
Articles of Incorporation or Bylaws, the operation of which may at a subsequent
date result in a change of control of our company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as described below, no director, executive officer, principal shareholder
holding at least 5% of our common shares, or any family member thereof, had any
material interest, direct or indirect, in any transaction, or proposed
transaction, during the period ended March 31, 2008, in which the amount
involved in the transaction exceeded or exceeds the lesser of $120,000 or one
percent of the average of our total assets at the year end for the last three
completed fiscal years.
On May 17, 2007 Mr. Ofir and Cohen each purchased 20,000,000 shares of our
common stock for $0.00005 per share, or $1,000 each, for an aggregate of $2,000.
The promoters of our company are Guy Ofir, our President and director and
Emanuel Cohen, our Secretary, Treasurer and director.
We have determined that neither Mr. Guy Ofir nor Mr. Emanuel Cohen are
independent directors, as that term is used in Rule 4200(a)(15) of the Rules of
the Financial Industry Regulatory Authority.
During the period ended March 31, 2008, the Company paid $200,000 in product
development costs to a company wholly owned by the president of the Company and
its director, Mr. Ofir.
The Company's directors provide office space free of charge. The Company has
recorded the estimated fair value of the office space of $1,000 per month as a
contribution to capital.
DISCLOSURE OF SEC POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Bylaws provide that we will indemnify an officer, director, or former
officer or director, to the full extent permitted by law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
27
EXPERTS
The financial statements of Easy Energy included in this registration statement
have been audited by Moore & Associates Chartered, to the extent and for the
period set forth in their report (which contains an explanatory paragraph
regarding our company's ability to continue as a going concern) appearing
elsewhere in the registration statement, and are included in reliance upon such
report given upon the authority of said firm as experts in auditing and
accounting.
Zysman, Aharoni, Gayer & Co./Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts 02110 has provided an opinion on the validity of the
shares of our common stock that are the subject of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information the Company files at the SEC's public reference room at 100 F
Street, NE, N.W., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference room. Our SEC
filings are also available to the public from commercial document retrieval
services and through the web site maintained by the SEC at www.sec.gov.
As allowed by SEC rules, this prospectus does not contain all the information
you can find in the registration statement or the exhibits filed with or
incorporated by reference into the registration statement. Whenever a reference
is made in this prospectus to an agreement or other document of the Company, be
aware that such reference is not necessarily complete and that you should refer
to the exhibits that are filed with or incorporated by reference into the
registration statement for a copy of the agreement or other document. You may
review a copy of the registration statement at the SEC's public reference room
in Washington, D.C., as well as through the web site maintained by the SEC at
www.sec.gov.
You should read this prospectus and any prospectus supplement together with the
registration statement and the exhibits filed with or incorporated by reference
into the registration statement. The information contained in this prospectus
speaks only as of its date unless the information specifically indicates that
another date applies.
We have not authorized any person to give any information or to make any
representations that differ from, or add to, the information discussed in this
prospectus. Therefore, if anyone gives you different or additional information,
you should not rely on it.
We maintain a website on the Internet at www.easy-energy.biz. Our website and
the information included on our website is not part of this prospectus.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, under the Securities Act with respect to the securities
offered under this prospectus. This prospectus, which forms a part of that
registration statement, does not contain all information included in the
registration statement. Certain information is omitted and you should refer to
the registration statement and its exhibits. Our filings and the registration
statement can also be reviewed by accessing the SEC's website at
http://www.sec.gov.
NO FINDER, DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY OUR
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
28
RESTATED FINANCIAL STATEMENTS
MARCH 31, 2008
INDEX
Our restated financial statements are stated in United States Dollars (US$) and
are prepared in conformity with generally accepted accounting principles of the
United States of America.
The following audited restated financial statements pertaining to Easy Energy
Inc. are filed as part of this registration statement:
Page
Number
------
Restated Financial Statements
Report of Independent Registered Public Accounting Firm F-1
Restated Balance Sheets F-2
Restated Statements of Operations F-3
Restated Statement of Stockholders' Equity F-4
Restated Statements of Cash Flow F-5
Notes to audited Restated Financial Statements F-6
29
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Easy Energy, Inc.
(A Development Stage Company)
We have audited the accompanying restated balance sheets of Easy Energy, Inc. (A
Development Stage Company) as of March 31, 2008 and December 31, 2007, and the
related restated statements of operations, stockholders' equity and cash flows
for the three months ended March 31, 2008, since inception on May 17, 2007
through December 31, 2007 and since inception on May 17, 2007 through March 31,
2008. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the restated financial statements referred to above present
fairly, in all material respects, the financial position of Easy Energy, Inc. (A
Development Stage Company) as of March 31, 2008 and December 31, 2007, and the
related restated statements of operations, stockholders' equity and cash flows
for the three months ended March 31, 2008, since inception on May 17, 2007
through December 31, 2007 and since inception on May 17, 2007 through March 31,
2008, in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has net losses of $397,544, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Moore & Associates, Chartered
- ----------------------------------------
Moore & Associates Chartered
Las Vegas, Nevada
July 3, 2008
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7499 FAX (702) 253-7501
F-1
Easy Energy, Inc.
(A Development Stage Company)
Restated Balance Sheets
March 31, 2008
March 31, December 31,
2008 2007
----------- -----------
ASSETS
Current:
Cash and bank accounts $ 725,747 $ 72,688
Prepaid expenses 50,000 --
----------- -----------
Total current assets 775,747 72,688
----------- -----------
Total Assets $ 775,747 $ 72,688
=========== ===========
LIABILITIES
Current:
Due to director $ 300 $ 300
----------- -----------
300 300
----------- -----------
STOCKHOLDERS` EQUITY
Preferred stock authorized -
50,000,000 shares with a par value of $0.0001
Common stock authorized -
1,000,000,000 shares with a par value of $0.00001
None issued or outstanding
Common stock issued and outstanding -
93,186,070 common shares (December 31, 2007: 80,333,190) 932 803
Additional paid in capital 1,527,104 101,697
Prepaid expenses - stock related (105,000) --
Deferred offering costs - stock related (211,765) --
Deficit accumulated during the development stage (435,824) (30,112)
----------- -----------
775,447 72,388
----------- -----------
Total Liabilities and Stockholders' Equity $ 775,747 $ 72,688
=========== ===========
The accompanying notes are an integral part of these financial statements
F-2
Easy Energy, Inc.
(A Development Stage Company)
Restated Statements of Operations
For the three months ended March 31, 2008 and
the period ended May 17, 2007 (Date of inception) to March 31, 2008
May 17, 2007 May 17, 2007
Three Months (Inception) to (Inception) to
March 31, December 31, March 31,
2008 2007 2008
----------- ----------- -----------
Revenue $ -- $ -- $ --
Expenses
General and Administrative 4,475 29,780 34,255
Filing Fee -- 1,000 1,000
Product Development 200,000 -- 200,000
Professional fees 202,497 -- 202,497
----------- ----------- -----------
Total Expenses 406,972 30,780 437,752
----------- ----------- -----------
Other Income
Interest income 1,260 668 1,928
Total Other Income 1,260 668 1,928
----------- ----------- -----------
Net loss before income taxes (405,712) (30,112) (435,824)
Provision for Income Taxes -- -- --
----------- ----------- -----------
Net loss for the period $ (405,712) $ (30,112) $ (435,824)
=========== =========== ===========
Basic and Diluted
(Loss) per Share a a a
----------- ----------- -----------
Weighted Average Number of Shares 82,381,390 50,586,601 72,169,343
----------- ----------- -----------
- ----------
(a) = Less than $0.01 per share
The accompanying notes are an integral part of these financial statements
F-3
Easy Energy, Inc.
(A Development Stage Company)
Restated Statements of Cash Flows
For the three months ended March 31, 2008
the period ended May 17, 2007 (Date of inception) to March 31, 2008
May 17, 2007 May 17, 2007
Three Months (Inception) to (Inception) to
March 31, December 31, March 31,
2008 2007 2008
----------- ----------- -----------
Operating Activities
Net loss $ (405,712) $ (30,112) $ (435,824)
Adjustments to reconcile net loss to
cash used in operating activities:
Contributed capital 3,000 7,500 10,500
Common stock and warrants issued for services 80,770 -- 80,770
Changes in operating assets and liabilities:
(Increase) in prepaid expenses (50,000) -- (50,000)
----------- ----------- -----------
Net Cash (Used) by Operating Activities (371,942) (22,612) (394,554)
----------- ----------- -----------
Financing Activities
Cash from sale of stock 1,025,001 95,000 1,120,001
Due to shareholder -- 300 300
----------- ----------- -----------
Cash Provided by Financing Activities 1,025,001 95,300 1,120,301
----------- ----------- -----------
Net Increase in Cash 653,059 72,688 725,747
Cash, Beginning of Period 72,688 -- --
----------- ----------- -----------
Cash, End of Period $ 725,747 $ 72,688 $ 725,747
=========== =========== ===========
Non-cash activities:
Stock issued for services $ 3,000 $ -- $ 3,000
Supplemental Information:
Interest Paid $ -- $ -- $ --
Income Taxes Paid $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements
F-4
Easy Energy, Inc.
(A Development Stage Company)
Restated Statements of Stockholders` Equity
March 31, 2008
Common Shares Prepaid
------------------- Additional Expenses
Issued Paid In Stock
Shares Amount Capital Related
------ ------ ------- -------
Balance, May 17, 2007 (date of inception) -- $ -- $ -- $ --
Issued to founders on May 17, 2007 @ $0.00005 40,000,000 400 1,600 --
Private placement May 17, 2007 @ $0.0002 10,000,000 100 1,900 --
Private placement August 17, 2007 @ $0.003 30,333,190 303 90,697 --
Contributed capital -- -- 7,500 --
Net loss -- -- -- --
---------- ----- ---------- ----------
Balance, December 31, 2007 80,333,190 803 101,697 --
Private placement February 28, 2008 @ $0.17 3,676,480 37 624,964 --
Private placement February 28, 2008 @ $0.24 208,333 2 49,998 --
Shares for services March 3, 2008 @$0.24 300,000 3 71,997 --
Shares for services March 10, 2008 @ $0.24 882,353 9 211,756 --
Private placement March 25, 2008 @ $0.025 2,000,000 20 49,980 --
Private placement March 27, 2008 @ $0.07 4,285,714 43 299,957 --
Shares for services March 27, 2008 @ $0.07 1,500,000 15 104,985 (105,000)
Contributed capital -- -- 3,000 --
Fair value of warrants granted -- -- 8,770 --
Net loss -- -- -- --
---------- ----- ---------- ----------
BALANCE, MARCH 31, 2008 93,186,070 $ 932 $1,527,104 $ (105,000)
========== ===== ========== ==========
Deferred
Offering
Costs Deficit Total
----- ------- -----
Balance, May 17, 2007 (date of inception) $ -- $ -- $ --
Issued to founders on May 17, 2007 @ $0.00005 -- -- 2,000
Private placement May 17, 2007 @ $0.0002 -- -- 2,000
Private placement August 17, 2007 @ $0.003 -- -- 91,000
Contributed capital -- -- 7,500
Net loss -- (30,112) (30,112)
---------- ---------- ---------
Balance, December 31, 2007 -- (30,112) 72,388
Private placement February 28, 2008 @ $0.17 -- -- 625,001
Private placement February 28, 2008 @ $0.24 -- -- 50,000
Shares for services March 3, 2008 @$0.24 -- -- 72,000
Shares for services March 10, 2008 @ $0.24 (211,765) -- --
Private placement March 25, 2008 @ $0.025 -- -- 50,000
Private placement March 27, 2008 @ $0.07 -- -- 300,000
Shares for services March 27, 2008 @ $0.07 -- -- --
Contributed capital -- -- 3,000
Fair value of warrants granted -- -- 8,770
Net loss -- (405,712) (405,712)
---------- ---------- ---------
BALANCE, MARCH 31, 2008 $ (211,765) $ (435,824) $ 775,447
========== ========== =========
The accompanying notes are an integral part of these financial statements
F-5
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 1 - NATURE OF OPERATIONS
The Company was originally incorporated under the laws of the state of Nevada on
May 17, 2007. The Company has limited operations and in accordance with SFAS #7,
is considered a development stage company, and has had no revenues from
operations to date.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective its inception.
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity.
DIVIDENDS
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" and FIN 48. SFAS No. 109
requires the use of an asset and liability approach in accounting for income
taxes.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company to
utilize the loss carry-forward.
F-6
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for the
period from inception to March 31, 2008 of $435,824 and the Company has not
established revenue sufficient to cover its operating expenses. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern.
Managements' plan is to complete the design of the Company's product, to engage
third parties firms to manufacture the components of the product, develop and
manufacture a first product suited to cellular phone use and explore potential
distributors for our product. The Company had approximately $725,000 on hand as
of March 31, 2008, management anticipates that such funds will not be sufficient
to pay our estimated expenses for the next twelve month period. Management
expects to start generating revenue within 8-10 months but has no assurance that
such revenues shall be generated and in what amounts. Management intends to
fulfill any additional cash requirement through the sale of either equity or
debt. However, the Company has not identified the source of additional cash and
there is no guarantee that such funds will be available or if available that the
terms will be acceptable to the Company.
The Company's continuation as a going concern is dependent on its ability to
complete and market its product and to obtain additional financing as may be
required and ultimately to attain profitability. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 - DEFERRED OFFERING COSTS - STOCK RELATED
On March 10, 2008 the Company entered into agreements relating to the issuance
of 882,353 shares of the Company's common stock, par value $0.00001 per share,
and a warrant to purchase up to 3,000,000 shares of the Company's common stock
at a price of $0.27 per share.
The shares issued to date as part of this agreement have been charged to
deferred financing cost until such time the Company exercises its option to
demand an additional $1,000,000 of financing from the financer. At such time,
the deferred financing charges will be offset against the financing.
NOTE 5 - CAPITAL STOCK
COMMON SHARES - AUTHORIZED
The company has 1,000,000,000 common shares authorized at a par value of
$0.00001 per share and 50,000,000 shares of preferred stock at a par value of
$0.0001 per shares. All common stock have equal voting rights, are
non-assessable and have one vote per share. Voting rights are not non-cumulative
and, therefore, the holders of more than 50% of the stock could, if they choose
to do so, elect all the directors of the company.
F-7
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 5 - CAPITAL STOCK (CONTINUED)
ISSUED AND OUTSTANDING -
On May 17, 2007 (inception), the Company issued 40,000,000 shares of its common
stock to its Directors for cash of $2,000. See Note 5.
On May 17, 2007, the Company closed a private placement for 10,000,000 common
shares at a price of $0.0002 per share, or an aggregate of $2,000. The Company
accepted subscription from two offshore non-affiliated investors.
On August 27, 2007, the Company closed a private placement for 30,333,190 common
shares at a price of $0.003 per share, or an aggregate of $91,000. The Company
accepted subscription from forty offshore non-affiliated investors.
On February 8, 2008, the Company changed it number of authorized shares of
Common Stock from 100,000,000 to 1,000,000,000 and provide for a ten for one
forward split of the Registrant's shares of common stock outstanding.
On February 28, 2008, the Company commenced a private placement offering of
367,647.6 units, each unit being offered for $1.70, for aggregate gross proceeds
of $625,001. Each unit consists of (i) ten common stock shares, (ii) thirty
Class A Warrant. Each Class A Warrant entitles the holder thereof to purchase
one share of common stock at an exercise price of $0.27 per share, expiring five
years from the date of purchase. This offering is being made to non-U.S. persons
in offshore transactions pursuant to the exemption from registration provided by
Regulation S of the Securities Act.
On February 28, 2008, the Company completed a subscription agreement pursuant to
which it sold and issued 208,333 common stock shares under Rule 903 of
Regulation S of the Act of 1933 (the "Act") to an accredited investor for the
aggregate purchase price of US $50,000, purchase price US $0.24 per share.
On March 3, 2008, the Company signed a subscription agreement in which it
undertook to issue to its legal counsel 300,000 shares of restricted common
stock valued at $0.24 per share based upon the Regulation S offering completed
at approximately the same date for an aggregate price of $72,000 for legal
services provided and warrants to purchase 1,000,000 shares of the Company's
common stock at an exercise price of $0.15 for a period of five years. The
warrants were valued in accordance with SFAS 123R using the assumptions
described below and resulted in an expense of $1,031.
On March 10, 2008, the Company entered into a Securities Purchase Agreement and
a Registration Rights Agreement with Tailor Made Capital, Ltd. ("TMC") relating
to the issuance to TMC of 882,353 shares of the Company's common stock, par
value $0.0001 per share, and a warrant to purchase up to 3,000,000 shares of the
Company's common stock at a price of $0.27 per share (the "Warrant"). The shares
were issued for deferred stock offering costs and valued at $0.24 per share
based upon the Regulation S offering completed at approximately the same date
for an aggregate price of $211,765. The warrant shall be in effect for five
years from the date that the Company's common stock is initially listed or
quoted for trading on a trading market. The warrants were valued in accordance
with SFAS 123R using the assumptions described below and resulted in an expense
of $7,739.On March 25, 2008, we entered into a subscription agreement under
which we undertook to issue 2,000,000 shares for cash payment of $50,000 by an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act of 1933, and, in consideration for services provided, warrants to
purchase 1,000,000 shares of the Company's common stock at an exercise price of
$0.10 for a period of three years.
On March 27, 2008(pursuant to an agreement dated January 16, 2008),, we issued
4,285,714 common stock shares to an "accredited investor" as defined in Rule 501
of Regulation D under the Securities Act of 1933 for the aggregate purchase
price of US $300,000, purchase price of $0.07 per share.
F-8
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 5 - CAPITAL STOCK (CONTINUED)
ISSUED AND OUTSTANDING (CONTINUED) -
On March 27, 2008, we entered into a consulting services agreement of which the
consultant will provide certain investor and market relations consulting
services to the Company in consideration of the Company's issuance of 1,500,000
restricted common shares and the sum of $100,000. The common shares were valued
at $0.07 per share for a total of $105,000. The expense will be amortized over
the one year service agreement beginning April 1, 2008. The share price for
valuing the shares was determined based upon the price of the shares issued in
the Regulation D offering completed the same day.
WARRANTS OUTSTANDING -
Date Issued Number of Warrants Exercise Price Expiry Date
- ----------- ------------------ -------------- -----------
February 28, 2008 11,029,428 $ 0.27 February 28, 2013
March 3, 2008 1,000,000 $ 0.15 March 3, 2013
March 10, 2008 3,000,000 $ 0.27 March 10, 2013
March 25, 2008 1,000,000 $ 0.10 March 25, 2008
The value allocated to the warrants was estimated using the Black-Scholes option
pricing model with the following assumptions: dividend yield of 0%, expected
volatility of 100%, risk-free interest rate of 3.94% and expected lives of
3years to 5 years.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company's directors provide office space free of charge. The Company has
recorded the estimated value of the office space of $1,000 per month as a
contribution to capital. The officers and directors of the Company are involved
in other business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes available,
such persons may face a conflict in selecting between the Company and their
other business interests. The Company has not formulated a policy for the
resolution of such conflicts.
On May 17, 2007 (inception), the Company issued 40,000,000 shares of its common
stock to its Directors for cash of $2,000. See Note 4.
During the period ended March 31, 2008, the Company paid $200,000 in product
development costs to a company wholly owned by the president and director of the
Company.
NOTE 7 - INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total
deferred tax asset is $95,881, which is calculated by multiplying a 22%
estimated tax rate by the cumulative NOL of $435,824.
F-9
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
Below is a listing of the most recent accounting standards SFAS 150-162 and
their effect on the Company.
STATEMENT NO. 150 - ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH
CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY (ISSUED 5/03)
This Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The application of SFAS No. 150 did not have any effect on the Company's
financial statements.
STATEMENT NO. 151 - INVENTORY COSTS-AN AMENDMENT OF ARB NO. 43, CHAPTER 4
(ISSUED 11/04)
This statement amends the guidance in ARB No. 43, Chapter 4, INVENTORY PRICING,
to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
Chapter 4, previously stated that "...under some circumstances, items such as
idle facility expense, excessive spoilage, double freight and re-handling costs
may be so abnormal ass to require treatment as current period charges...." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. The application of SFAS No. 151 did not have any effect on the
Company's financial statements.
STATEMENT NO. 152 - ACCOUNTING FOR REAL ESTATE TIME-SHARING TRANSACTIONS (AN
AMENDMENT OF FASB STATEMENTS NO. 66 AND 67)
This Statement amends FASB Statement No. 66, ACCOUNTING FOR SALES OF REAL
ESTATE, to reference the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP) 04-2, ACCOUNTING FOR REAL ESTATE TIME-SHARING TRANSACTIONS.
This Statement also amends FASB Statement No. 67, Accounting FOR COSTS AND
INITIAL RENTAL OPERATIONS OF REAL ESTATE PROJECTS, states that the guidance for
(a) incidental operations and (b) costs incurred to sell real estate projects
does not apply to real estate time-sharing transactions. The accounting for
those operations and costs is subject to the guidance in SOP 04-2. The
application of SFAS No. 152 did not have any effect on the Company's financial
statements.
STATEMENT NO. 153 - EXCHANGES OF NON-MONETARY ASSETS (AN AMENDMENT OF APB
OPINION NO. 29)
The guidance in APB Opinion No. 29, ACCOUNTING FOR NON-MONETARY TRANSACTIONS, is
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that Opinion,
however, includes certain exceptions to the principle. This Statement amends
Opinion 29 to eliminate the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
non-monetary assets that do not have commercial substance. A non-monetary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. The Company has
applied SFAS No. 153 to the changes made in the financial statements as of March
31, 2008 and December 31, 2007.
STATEMENT NO. 154 - ACCOUNTING CHANGES AND ERROR CORRECTIONS (A REPLACEMENT OF
APB OPINION NO. 20 AND FASB STATEMENT NO. 3)
This Statement replaces APB Opinion No. 20, ACCOUNTING CHANGES, and FASB
Statement No. 3, REPORTING ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS,
and changes the requirements for the accounting for and reporting of a change in
F-10
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENT (CONTINUED)
accounting principle. This Statement applies to all voluntary changes in
accounting principle. It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement does not include
specific transition provisions. When a pronouncement includes specific
transition provisions, those provisions should be followed. The Company has
applied SFAS No. 154 to the changes made in the financial statements as of March
31, 2008 and December 31, 2007.
SFAS NO. 155 - ACCOUNTING FOR CERTAIN HYBRID FINANCIAL INSTRUMENTS-AN AMENDMENT
OF FASB STATEMENTS NO. 133 AND 140
This statement amends FASB Statements No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. This statement
resolves issues addressed in Statement 133 Implementation Issue No. D1,
Application of Statement 133 to Beneficial Interests in Securitized Financial
Assets. This statement is effective for all financial instruments acquired or
issued after
the beginning of an entity's first fiscal year that begins after September 15,
2006. The application of SFAS No. 155 did not have any effect on the Company's
financial statements.
SFAS NO. 156 - ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS-AN AMENDMENT OF FASB
STATEMENT NO. 140
This statement amends FASB Statement No. 140 with respect to the accounting for
separately recognized servicing liabilities. An entity should adopt this
statement as of the beginning of its first fiscal year that begins after
September 15, 2006. The application of SFAS No. 156 did not have any effect on
the Company's financial statements.
SFAS NO. 157 - FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which
defines fair value, establishes a framework for measuring fair value in GAAP,
and expands disclosures about fair value measurements. SFAS No. 157 does not
require any new fair value measurements, but provides guidance on how to measure
fair value by providing a fair value hierarchy used to classify the source of
the information. This statement is effective for us beginning May 1, 2008. The
application of SFAS No. 157 will not have any effect on the Company's financial
statements.
SFAS NO. 158 - EMPLOYERS' ACCOUNTING FOR DEFINED BENEFIT PENSION AND OTHER
POSTRETIREMENT PLANS-AN AMENDMENT OF FASB STATEMENTS NO. 87, 88, 106, AND
132(R))
This statement improves the financial reporting by requiring an employer to
recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liabilities
in its statement of financial positions and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity. This statement also improves financial reporting by requiring
an employer to measure the funded status of a plan as of the date of its
year-end statement of financial position, with limited exceptions. The
application of SFAS No. 158 did not have any effect on the Company's financial
statements.
SFAS NO. 159 - THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL
LIABILITIES-INCLUDING AN AMENDMENT OF FASB STATEMENT NO. 115
This statement permits entities to choose to measure many financial instruments
and certain items at fair value. The objective is to improve the financial
reporting by providing entities with the opportunity to mitigate volatility in
F-11
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENT (CONTINUED)
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This statement is
expected to expand the use of fair value measurement objectives for accounting
for financial instruments. This statement is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007. The application
of SFAS No. 159 did not have any effect on the Company's financial statements.
SFAS NO. 160 - NON-CONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS- AN
AMENDMENT OF ARB NO. 51
This statement amends ARB 51 to establish accounting and reporting standards for
the non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It also changes the way the consolidated income statement is
presented for non-controlling interest. This statement improves comparability by
eliminating diversity of methods. This statement also requires expanded
disclosure. The application of SFAS No. 160 did not have any effect on the
Company's financial statements.
SFAS NO. 161
This statement is intended to enhance the disclosure requirements for derivative
instruments and hedging activities as required by SFAS 133. The application of
SFAS No. 161 did not have any effect on the Company's financial statements.
SFAS 162
This statement identifies the sources of accounting principles and the framework
for selecting the principles to be used in the preparation of financial
statements for entities that are presented in conformity with GAAP hierarchy.
The application of SFAS No. 162 did not have any effect on the Company's
financial statements.
The past and future adoption of these Statements did not have and is not
expected to have a material effect on the Company's current financial position,
results or operations, or cash flows.
NOTE 9 - RESTATED FINANCIAL STATEMENTS
The Company's financial statements were revised to correct the valuation of
shares and warrants issued for services, record contributed office rent and
record prepaid expenses. A summary of the changes is presented below:
BALANCE SHEET
As revised Original
---------- --------
ASSETS
Total current assets $775,747 $775,747
-------- --------
Total Assets $775,747 $775,747
======== ========
LIABILITIES
Current:
Due to director $ 300 $ 300
F-12
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 9 - RESTATED FINANCIAL STATEMENTS (CONTINUED)
As Revised Original
---------- --------
STOCKHOLDERS` EQUITY
Common stock authorized -
1,000,000,000 shares with a par value of $0.00001
Common stock issued and outstanding -
93,186,070 common shares (December 31, 2007: 80,333,190) 932 932
Additional paid in capital 1,527,104 1,235,893
Prepaid expenses - stock related (105,000) (105,000)
Deferred offering costs - stock related (211,765) (8,824)
Deficit accumulated during the development stage (435,824) (347,554)
----------- -----------
Total Liabilities and Stockholders' Equity $ 775,747 $ 775,747
=========== ===========
STATEMENT OF OPERATIONS
As Revised Original
May 17, 2007 May 17, 2007
(Inception) to (Inception) to
December 31, December 31,
2007 2007
----------- -----------
Revenue $ -- $ --
Expenses
General and Administrative 29,780 22,281
Filing Fee 1,000 1,000
----------- -----------
Total Expenses 30,780 23,281
----------- -----------
Other Income
Interest income 668 668
Provision for Income Taxes -- --
----------- -----------
Net loss for the period $ (30,112) $ (22,613)
=========== ===========
F-13
Easy Energy, Inc.
(A Development Stage Company)
Notes to Restated Financial Statements
March 31, 2008
NOTE 9 - RESTATED FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
As Revised Original
For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
2008 2008
--------- ---------
Revenue $ -- $ --
Expenses
General and Administrative 4,475 1,476
Product Development 200,000 200,000
Professional Fees 202,497 124,727
Total Expenses 406,972 326,203
--------- ---------
Other Income
Interest income 1,260 1,260
Provision for Income Taxes -- --
--------- ---------
Net loss for the period $(405,712) $(324,943)
========= =========
F-14
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being registered
hereunder. No expenses shall be borne by the selling shareholders.
SEC registration fees $ 243.32
Legal and accounting fees $20,000.00 (1)
Miscellaneous $ 1,000.00 (1)
----------
TOTAL $21,243.32 (1)
==========
- ----------
(1) We have estimated these amounts.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS"), our Articles of Incorporation and our Bylaws.
INDEMNIFICATION
Chapter 78 of the NRS, pertaining to private corporations, provides that we are
required to indemnify our officers and directors to the extent that they are
successful in defending any actions or claims brought against them as a result
of serving in that position, including criminal, civil, administrative or
investigative actions and actions brought by or on behalf of Easy Energy.
Chapter 78 of the NRS further provides that we are permitted to indemnify our
officers and directors for criminal, civil, administrative or investigative
actions brought against them by third parties and for actions brought by or on
behalf of Easy Energy, even if they are unsuccessful in defending that action,
unless the officer or director's:
(a) action or inaction constituted a breach of his fiduciary duties as a
director or officer; and
(b) the breach of those duties involved intentional misconduct, fraud, or
a knowing violation of law.
However, with respect to actions brought by or on behalf of Easy Energy against
our officers or directors, we are not permitted to indemnify our officers or
directors where they are adjudged by a court, after the exhaustion of all
appeals, to be liable to us or for amounts paid in settlement to Easy Energy,
unless, and only to the extent that, a court determines that the officers or
directors are entitled to be indemnified.
Our Articles and Bylaws provide that we will indemnify our directors and
officers to the fullest extent not prohibited by Nevada law; provided, however,
that we shall not be required to indemnify any director or officer in connection
with any proceeding (or part thereof) initiated by such person unless: (a) such
indemnification is expressly required to be made by law; (b) the proceeding was
authorized by our Board of Directors; (c) such indemnification is provided by
us, in our sole discretion, pursuant to the powers vested in us under Nevada
law; or (d) such indemnification is required to be made pursuant to the bylaws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following sets forth certain information concerning securities which were
sold or issued by us since our inception on May 17, 2007 without registration
under the Securities Act of 1933 (the "Act") in reliance on exemptions from such
registration requirements:
II-1
On March 27, 2008, we entered into a consulting services agreement of which the
consultant will provide certain investor and market relations consulting
services to the Company in consideration of the Company's issuance of 1,500,000
restricted common shares and the sum of $100,000. The issuance was exempt under
Regulation D under the Act and/or Section 4(2) of the Act.
On March 27, 2008 (pursuant to an agreement dated January 16, 2008), we issued
4,285,714 common stock shares to an "accredited investor" as defined in Rule 501
of Regulation D under the Act for the aggregate purchase price of $300,000, or
$0.07 per share.
On March 25, 2008, we entered into a subscription agreement under which we
undertook to issue 2,000,000 shares for cash payment of $50,000 by an
"accredited investor" as defined in Rule 501 of Regulation D under the Act, and,
in consideration for services provided, warrants to purchase 1,000,000 shares of
the Company's common stock at an exercise price of $0.10 per share for a period
of three years.
On March 10, 2008, we entered into a Securities Purchase Agreement and a
Registration Rights Agreement with Tailor Made Capital, Ltd. ("TMC") relating to
the issuance to TMC of 882,353 shares of the Company's common stock, par value
$0.0001 per share, and a warrant to purchase up to 3,000,000 shares of the
Company's common stock at a price of $0.27 per share (the "Warrant"). The
Warrant shall be in effect for five years from the date that the Company's
common stock is initially listed or quoted for trading on a trading market. The
Securities Purchase Agreement further provides that, at the Company's demand,
TMC will purchase up to an additional $1,000,000 of shares of the Company's
common stock commencing immediately after the date that the shelf registration
of the Company's shares that are subject to the Securities Purchase Agreement is
declared effective. These sales were exempt under Regulation S and/or Regulation
D under the Act and/or Section 4(2) of the Act.
On March 3, 2008, we entered into a Regulation S Subscription Agreement pursuant
to which we issued under Rule 903 of Regulation S of the Act to our then legal
counsel 300,000 shares of restricted common stock for an aggregate price of
$3,000 for services provided and warrants to purchase 1,000,000 shares of the
Company's common stock at an exercise price of $0.15 per share for a period of
five years.
On February 28, 2008, we entered into a Regulation S Subscription Agreement
pursuant to which we sold and issued 208,333 common stock shares under Rule 903
of Regulation S of the Act to an accredited investor for the aggregate purchase
price of $50,000, or $0.24 per share.
On February 28, 2008, we sold 367,647 units, each unit being offered for $1.70,
for aggregate gross proceeds of $625,001 Each unit consisted of (i) ten common
stock shares, (ii) thirty Class A Warrants. Each Class A Warrant entitles the
holder thereof to purchase one share of common stock at an exercise price of
$0.27 per share, expiring five years from the date of purchase. This offering
was made to non-U.S. persons in offshore transactions pursuant to the exemption
from registration provided by Regulation S of the Act.
On August 17, 2007 we issued 30,033,319 shares of our common stock to forty non
U.S. subscribers at an offering price of $0.003 per share for gross offering
proceeds of $91,000 in an offshore transaction pursuant to an exemption from
registration under Rule 903 of Regulation S of the Act.
On May 17, 2007 we issued 40,000,000 shares of our common stock to two executive
officers of our company, at an offering price of $ 0.00005 per share for gross
offering proceeds of $2,000 in an offshore transaction pursuant to an exemption
from registration under Regulation S of the Act.
On May 17, 2007 we issued 10,000,000 shares of our common stock to two
subscribers at an offering price of $0.0002 per share for gross offering
proceeds of $2,000 in an offshore transaction pursuant to Regulation S of the
Securities Act of 1933.
All of the above issuances and sales were exempt under Regulation S and/or
Regulation D under the Act and/or Section 4(2) of the Act.
II-2
ITEM 16. EXHIBITS.
The following Exhibits are filed with this prospectus:
Exhibit
Number Description
------ -----------
3.1 Amended Articles of Incorporation (incorporated by reference to
exhibit 3.1 of the registrant's registration statement on Form
SB-2 filed on October 24, 2007).
3.2 Bylaws (incorporated by reference to exhibit 3.2 of the
registrant's registration statement on Form SB-2 filed on October
24, 2007).
4.1 Form of share certificate (incorporated by reference to exhibit
4.1 of the registrant's registration statement on form SB-2 filed
on October 24, 2007.)
4.2* Form of Stock Purchase Warrant dated February 28, 2008.
4.3* Appendix to Stock Purchase Warrant dated February 28, 2008.
5.1* Opinion of Zysman, Aharoni, Gayer & Co./ Sullivan & Worcester LLP
10.1 Form of subscription agreement (incorporated by reference to
exhibit 10.1 of the registrant's registration statement on Form
SB-2 filed on October 24, 2007).
10.2 Promissory Note of registrant to Guy Ofir (incorporated by
reference to exhibit 10.2 of the registrant's registration
statement on Form SB-2 filed on October 24, 2007).
10.3 Assignment of patent application (incorporated by reference to
exhibit 10.3 of the registrant's registration statement on Form
SB-2 filed on October 24, 2007).
10.4* Subscription Agreement dated February 28, 2008 between the
Registrant and the Meitav Entities.
10.5 Securities Purchase Agreement dated March 10, 2008 between the
registrant and Tailor Made Capital, Ltd. (incorporated by
reference to exhibit 4.1 of the registrant's Current Report on
Form 8-K filed on March 24, 2008, as amended on July 7, 2008).
10.6 Registration Rights Agreement dated March 10, 2008 between the
registrant and Tailor Made Capital, Ltd. (incorporated by
reference to exhibit 4.2 of the Current Report on Form 8-K filed
on March 24, 2008, as amended on July 7, 2008).
10.7* Investment Agreement dated January 16, 2008 between the
registrant and Meir Duke.
23.1* Consent of Moore & Associates Chartered
23.2* Consent of Zysman, Aharoni,Gayer & Co./ Sullivan & Worcester LLP,
included in Exhibit 5.1.
24.1 Power of Attorney (included on the signature page of the
registrant's registration statement number 333-150468 on Form S-1
filed with the Securities and Exchange Commission on April 25,
2008).
- ----------
* Filed herewith.
II-3
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
Each prospectus filed by the registrant pursuant to Rule 424(b) as part of
a registration statement relating to an offering, other than registration
statements relying on rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as
to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Las Vegas in the state of
Nevada, on July 7, 2008.
EASY ENERGY, INC.
By: /s/ Guy Ofir
-----------------------------------------------
Guy Ofir, President and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
By: /s/ Guy Ofir
-----------------------------------------------
Guy Ofir, President and Director
(Principal Executive Officer, Principal Financial
Officer and director)
Dated: July 7, 2008
By: *
-----------------------------------------------
Emanuel Cohen, Secretary, Treasurer and Director
Dated: July 7, 2008
* By: /s/ Guy Ofir
---------------------------------------------
Guy Ofir
(Attorney-in-Fact)
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